How To Calculate

Learn how to calculate anything
Menu
  • bmi
Home
Shares
How to Calculate Return on Equity.
Shares

How to Calculate Return on Equity.

Rosemary Njeri

Return on Equity (ROE) is one of the financial ratios used by stock investors in analyzing stocks.

ROE indicates how effective the management team is in generating profit with money invested.

The higher the ROE, the more profit a company is making from a specific amount invested.

Formula to calculate ROE.

Calculate Return on Equity.

Net income is the residual amount of earnings after all expenses have been deducted from sales.

Shareholders equity is the difference between total assets and total liabilities.

Example:

Mother and Daughters Limited Company reported a net income of $4 billion and total shareholders’ equity of $47.6 billion. Calculate the return on equity.

Calculate Return on Equity.

Therefore, the return on equity of the company is 8.4%.

Share
Tweet
Reddit
Pinterest
Email
Next Article

Related Articles

How to Calculate Market Capitalization.
Market capitalization, or market cap refers to how much a …

How to Calculate Market Capitalization.

How to Calculate Dividend Yield.
What is a Dividend? Before discussing how to calculate dividend …

How to Calculate Dividend Yield.

Leave a Reply Cancel Reply

Popular Posts

  • 5 Best AI Apps for Solving Complex …
    March 22, 2023 0

Categories

learntocalculate.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.

How To Calculate

Learn how to calculate anything

Pages

  • About Us
  • Contact Us
  • Privacy Policy
Copyright © 2023 How To Calculate

Ad Blocker Detected

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by disabling your ad blocker.

Refresh