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Business & Accounting

Return on Equity (ROE) Calculator

Calculate return on equity (ROE) on average shareholders’ equity, with an optional DuPont breakdown into margin, turnover and leverage.

Your inputs

Results

Return on average equity

25%

Average equity
$200,000.00
DuPont: net margin
10%
DuPont: asset turnover
1
DuPont: equity multiplier
2.5

✓Exact calculation — rounded only for display

What this calculator does

ROE shows the return generated on shareholders’ capital. The DuPont breakdown reveals whether it comes from profitability, efficiency or leverage.

Formula and method

ROE = net income ÷ average equity; DuPont: ROE = (net income ÷ revenue) × (revenue ÷ assets) × (assets ÷ equity)

Worked example

Calculated by this tool with its default inputs:

Inputs

  • Net income: 50000 (any currency)
  • Shareholders’ equity at start: 180000 (any currency)
  • Shareholders’ equity at end: 220000 (any currency)
  • Revenue (optional, for DuPont): 500000 (any currency)
  • Average total assets (optional, for DuPont): 500000 (any currency)

Results

  • Return on average equity: 25%
  • Average equity: 200,000
  • DuPont: net margin: 10%
  • DuPont: asset turnover: 1
  • DuPont: equity multiplier: 2.5

How to read the results

High ROE driven mainly by leverage carries more risk than ROE driven by margins.

Assumptions and limitations

  • ROE is not meaningful when equity is negative.

Financial results are estimates based on the inputs and assumptions shown. They are not financial advice; confirm figures with your lender, provider or a qualified adviser before making decisions.

Questions

What is a good ROE?

It varies by industry; compare with peers and the company’s cost of equity.

Methodology and verification

Result type
Exact mathematical calculation (rounded only for display)
Formula version
1.0
Automated verification
2 reference and validation test cases, checked against independently computed values. The site cannot be built if any of them fail.
Editorial review
Awaiting human editorial review. The explanation was drafted with AI assistance; the formula and examples are verified by the automated tests above.

Privacy

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