ROE calculator to calculate return on equity from net income and shareholder equity, or reverse solve the ROE formula to analyze profitability and efficiency.
Use this ROE calculator to calculate return on equity from net income and total equity, or solve for a missing value. ROE is one of the most widely used shareholder-return ratios because it links profit directly to the equity base.
ROE should not be interpreted alone. High ROE can reflect strong profitability, efficient asset use, or high leverage, which is why many analysts pair ROE with DuPont analysis and debt ratios.
ROE Calculator FAQ
What is ROE?
ROE stands for return on equity. It measures net income relative to shareholders’ equity and is used to assess how effectively equity capital is being used.
What is the ROE formula?
ROE = Net income / Total equity. This calculator can also solve for net income or total equity when the ratio and one input are known.
Why can ROE be high even when the business is risky?
ROE can be lifted by high leverage. That is why ROE should be reviewed together with debt-to-equity, debt ratio, and interest coverage.
ROE vs ROA: what is the difference?
ROA uses total assets as the denominator, while ROE uses equity. ROE is more shareholder-focused, while ROA is more neutral to capital structure.
How should I interpret ROE?
A higher ROE usually means equity capital is being used more effectively, but leverage can inflate the ratio. That is why ROE is most useful when read together with debt and margin ratios.
