Return on Common Equity Calculator

Formula

The formula to calculate the Return on Common Equity (ROCE) is:

\[ ROCE = \frac{AD}{EI} \times 100 \]

Where:

$ROCE$ is the Return on Common Equity (%)
$AD$ is the annual dividends ($)
$EI$ is the total common equity invested ($)

What is Return on Common Equity?

Return on Common Equity (ROCE) is a financial metric that measures the profitability of a company in relation to the equity held by common shareholders. It is expressed as a percentage and indicates how effectively a company is using the equity invested by its common shareholders to generate profits.

Example Calculation

Let's assume the following values:

Annual Dividends (AD) = $5000
Total Common Equity Invested (EI) = $100000

Using the formula to calculate the Return on Common Equity:

\[ ROCE = \frac{5000}{100000} \times 100 = 5\% \]

The Return on Common Equity (ROCE) is 5%.