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ROE Calculator

Return on equity — profit after tax on the owners' funds, on average or closing equity.

Rytvae Consulting · Think Right · Invest Right

ROE Calculator

Your numbers

Optional. If entered, the average of opening and closing is used.

Result

Show formula & working

ROE = PAT ÷ Average equity, where average equity = (Opening + Closing) ÷ 2

    How this works

    ROE shows the return the owners earn on the money they have in the business.

    Average equity is more accurate when equity changed during the year.

    Frequently asked questions

    Can ROE be too high?

    Very high ROE with thin equity often signals high leverage and risk.

    How does ROE break down?

    Into margin, asset turnover and leverage — see DuPont Analysis.

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    Want your ratios read the way a lender reads them?

    Classification, quasi-equity and one-off items all move the ratios. Talk to Rytvae before you approach lenders.

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