Return on Equity Calculator
Calculate ROE from net income and shareholders' equity. Use DuPont analysis to break ROE into margin, turnover, and leverage components. Compare two companies side by side to see what drives their returns.
Try another scenario
How to Use This Calculator
Tab "Calculate ROE"
Enter net income (annual, after tax) and shareholders' equity from the balance sheet. The calculator returns ROE as a percentage with a rating from weak to excellent. Optionally enter total assets to also see Return on Assets (ROA).
Tab "DuPont Breakdown"
Enter revenue, net income, total assets, and shareholders' equity. The calculator decomposes ROE into three components: net profit margin, asset turnover, and equity multiplier. It identifies which component is the primary driver of the company's ROE.
Tab "Compare Companies"
Enter the same four financial inputs for two companies. The calculator computes a full DuPont breakdown for each, showing whose ROE comes from margins versus leverage. Name each company for clearer results.
The Formulas
ROE = Net Income / Shareholders' Equity × 100%
DuPont decomposition:
ROE = Net Profit Margin × Asset Turnover × Equity Multiplier
= (Net Income / Revenue) × (Revenue / Total Assets) × (Total Assets / Equity)
Return on Assets (ROA):
ROA = Net Income / Total Assets × 100%
ROE rating scale:
Below 10% = Weak | 10–15% = Average | 15–20% = Good | Above 20% = Excellent
All calculations use standard financial analysis formulas. No country-specific adjustments are applied. Results depend on the accuracy of the financial data you provide.
Worked Examples
Example 1 — Basic ROE: $5M net income, $25M equity
A mid-size company earns $5 million in annual net income and has $25 million in shareholders' equity on its balance sheet.
A 20% ROE means the company generates $0.20 of profit for every $1 of equity. This is an excellent result, but investors should check whether it comes from high margins or high leverage using DuPont analysis.
Example 2 — DuPont analysis: Tech company
A technology company has $50M revenue, $5M net income, $50M total assets, and $25M equity.
The DuPont breakdown reveals that while the equity multiplier of 2.00x indicates moderate leverage, the 10% net margin is the primary contributor to ROE. The asset turnover of 1.00x is neutral.
Example 3 — Comparing Tech Co vs Retail Co
Tech Co: $80M revenue, $12M net income, $60M assets, $30M equity. Retail Co: $120M revenue, $6M net income, $200M assets, $40M equity.
Tech Co has a much higher ROE (40% vs 15%) driven by strong margins and efficient asset use. Retail Co's ROE comes primarily from high leverage (5.00x equity multiplier), meaning it relies heavily on debt. Despite lower ROE, Retail Co carries significantly more financial risk from its capital structure.