Calculator Paradise

    ROE — Return on Equity Formula

    Return on Equity (ROE) measures how efficiently a company uses shareholders' capital to generate profits. It's one of the most important profitability metrics.

    Return on Equity

    ROE = Net Income / Shareholders' Equity × 100

    Where:

    • NI = Net income (profit after tax)
    • E = Average shareholders' equity

    Step-by-Step:

    1. 1

      Find net income

      Profit after all expenses, interest, and taxes from the income statement.

    2. 2

      Find average equity

      (Beginning equity + Ending equity) / 2 from the balance sheet.

    3. 3

      Calculate

      (Net Income / Avg Equity) × 100 = ROE %.

    Worked Examples:

    Company profitability

    Net Income: ₹20 CrAvg Equity: ₹100 Cr

    Result: ROE = 20%

    (20/100) × 100 = 20%. Every ₹100 of shareholders' money generated ₹20 profit.

    Frequently Asked Questions