Return on Equity (ROE) Calculator with DuPont Breakdown

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Forward computes ROE; reverse finds the net income required to hit an ROE you choose.
Annual profit after taxes and interest, from the bottom of the income statement.
Dividends paid to preferred shareholders. These are subtracted from net income so ROE reflects common equity.
Average equity matches a full year of income against the equity in place across the year, which analysts prefer.
Total equity (assets minus liabilities) from the balance sheet.
Split ROE into net profit margin, asset turnover and the equity multiplier.
Currency
Return on equityHealthy
16%
Profit per $1 of equity$0.160
Equity used in the ratio$50,000,000
16% %
Negative<0Below average0-10Healthy10-20Strong20+

An ROE of 16% means the company earns about 16¢ of profit per dollar of equity.

  • Each dollar of equity earns about 16¢ of profit per year.
  • Most healthy, established companies post an ROE between 10% and 20%.
  • A very high ROE can come from heavy debt, which shrinks equity and inflates the ratio, so always check leverage.

Next stepCompare this ROE with the firm’s return on assets to see how much of the return is driven by borrowing.

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