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Return on equity (ROE) calculator

Compute return on equity from net income and shareholder equity.

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Enter Net income, Shareholder equity and the Return on equity (ROE) calculator works out Return on equity straight away. For instance, with Net income = $50,000.00 and Shareholder equity = $250,000.00 it returns Return on equity = 20%.

How to use it

  1. Enter your values: Net income, Shareholder equity.
  2. Read the result instantly: Return on equity.

Frequently asked questions

What does the Return on equity (ROE) calculator actually compute?

It takes Net income and Shareholder equity and derives Return on equity from them. The calculation is live as you type, so the result updates on every change.

What information do I need to provide?

2 values: Net income ($) and Shareholder equity ($). Nothing else is required — no account, no file upload.

Can you show a worked example?

With Net income = $50,000.00 and Shareholder equity = $250,000.00, the calculator returns Return on equity = 20%. Those figures come from running this exact tool, so you can reproduce them by entering the same values.

When would I actually use this?

Running the week: issuing an invoice or a quote, knowing what is in stock and what to reorder, and seeing whether cash covers what is due.

What is the most common mistake?

Reading profit as cash. A profitable month with sixty-day payment terms can still leave the account empty — the two numbers answer different questions.

What is the difference between the Return on equity (ROE) calculator and the Return on assets (ROA) calculator?

This one returns Return on equity; the Return on assets (ROA) calculator returns Return on assets. That is the whole difference — open the one whose figure you need.

Is there a tool for the next step?

Return on net assets calculator is the closest one after this: Return on net assets (RONA) shows how well a company turns its fixed assets and working capital into profit. It divides net income by the sum of fixed assets and working capital, rewarding businesses that generate strong earnings from a lean asset base.

What else is worth having open alongside it?

Debt-to-equity ratio calculator and Equity multiplier calculator — they come up in the same task often enough to be worth a second tab.

Where do the figures come from, and how current are they?

The arithmetic is exact for what you enter. Invoice content, VAT treatment and mandatory mentions are set by national rules — an invoice that computes correctly can still be non-compliant.

Further reading

All guides →
ExplainerTwenty Per Cent Return on Equity, Half of It BorrowedNet income of 50,000 on equity of 250,000 is an ROE of 20 %. The same profit on 500,000 of equity is 10 % — the extra ten points came from the debt, not from the business.ExplainerReturn on Assets: What the Ratio Says About a Business, and What It HidesReturn on assets, return on net assets and return on capital employed are one family with two moving parts. On the same balance sheet they read 8.3%, 10.2% and 15.6% — and the two steps between them are exactly the two decisions you are making.ExplainerGrowing a Business That Earns Less Than Its Capital Costs5 million of operating profit on 20 million of capital employed is a 25 % return. Against a cost of capital of 8 % that is a spread of 17 points; at 6 % it would be a spread of −2, and every extra euro invested would destroy value.ExplainerWACC Explained, and Why the Number Is Mostly an AssumptionWACC = E/V × Re + D/V × Rd × (1 − T). The tax shield makes debt genuinely cheaper, and the cost of equity comes from CAPM — whose beta and equity risk premium are estimates that move the answer by whole percentage points, and the valuation by a quarter.ExplainerOne Balance Sheet, Three Ratios, and Only One of Them Has a Ceiling500,000 of liabilities against 1,200,000 of assets is 41.7 % debt, 58.3 % equity and a debt-to-equity of 0.71. The third one runs to infinity as the equity vanishes; the first cannot pass 100 %.ExplainerCovering Your Interest Ten Times Says Nothing About Repaying the LoanEBIT of 500,000 against interest of 50,000 is a cover of 10×. Refinance at a rate 3.6 times higher and the same business covers 2.78× — and neither figure has looked at the principal.