Return on Equity Calculator

Formula

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

\[ ROE = \left( \frac{\text{Net Profit}}{\text{Equity}} \right) \times 100 \]

Where:

$ROE$ is the Return on Equity (%)
Net Profit is revenue minus costs ($)
Equity is the total dollar amount of your equity ($)

What is Return on Equity?

Return on Equity (ROE) is the ratio of net profit to total equity spent on a project. It is a measure of the profitability of a business in relation to the equity.

Example Calculation 1

Let's assume the following values:

Net Profit = $50,000
Equity = $200,000

Using the formula:

\[ ROE = \left( \frac{50,000}{200,000} \right) \times 100 = 25\% \]

The Return on Equity is 25%.

Example Calculation 2

Let's assume the following values:

Net Profit = $75,000
Equity = $300,000

Using the formula:

\[ ROE = \left( \frac{75,000}{300,000} \right) \times 100 = 25\% \]

The Return on Equity is 25%.