Calculating your return on equity (roe) is straightforward once you know the Return on Equity formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Return on Equity Calculator.
What is Return on Equity?
The Return on Equity calculation tells you your return on equity (roe) from a few simple inputs. The figure you are solving for here is the return on equity (roe), expressed in percent.
The Return on Equity formula
The core formula is:
Return on equity (ROE) = Net income ÷ Shareholders' equity × 100Here is what each input means:
- Net income — a money amount. Example: ₹5,00,000.
- Shareholders' equity — a money amount. Example: ₹25,00,000.
How to calculate it step by step
- Write down the net income (for example, ₹5,00,000).
- Write down the shareholders' equity (for example, ₹25,00,000).
- Apply the formula above to get your return on equity (roe).
- Double-check the result with the Return on Equity Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Net income | ₹5,00,000 |
| Shareholders' equity | ₹25,00,000 |
| Return on equity (ROE) | 20.00% |
With net income of ₹5,00,000 and shareholders' equity of ₹25,00,000, the return on equity (roe) works out to 20.00%.
Example 2
With net income of ₹10,00,000 and shareholders' equity of ₹25,00,000, the return on equity (roe) works out to 40.00%.
| Result | Value |
|---|---|
| Return on equity (ROE) | 40.00% |
Example 3
With net income of ₹2,50,000 and shareholders' equity of ₹25,00,000, the return on equity (roe) works out to 10.00%.
| Result | Value |
|---|---|
| Return on equity (ROE) | 10.00% |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
Prefer not to do the maths by hand? — the Return on Equity Calculator does it instantly, for free, with the formula and a worked example built in.
Related calculators
Continue exploring business calculators with these tools: Discount Calculator, Price Elasticity of Demand Calculator, Profit Margin Calculator, Gross Profit Calculator, ROI Calculator.