Roe Calculator

How to Use the Return on Equity (ROE) Calculator

The Return on Equity (ROE) Calculator is a useful tool for determining the profitability of a company in relation to its shareholders’ equity. This guide will walk you through the process of using it effectively.

Step 1: Enter Net Income

First, you need to provide the net income of the company. This is the profit after all expenses and taxes have been deducted from the total revenue. Enter this number in the field labeled Net Income ($). Ensure the value is accurate and meets the required minimum value.

• Validation: This field is required and must be a numerical value. The minimum value is -999,999,999,999, and it should be rounded to two decimal places.

Step 2: Enter Shareholders’ Equity

Next, input the amount of shareholders’ equity. This represents the net assets owned by the shareholders. Fill in the value in the field labeled Shareholders’ Equity ($).

• Validation: This field is required and must be a positive number greater than 0.01, rounded to two decimal places.

Step 3: Select Calculation Period

Choose the period over which you want to calculate the ROE. You can select from Annual, Quarterly, or Monthly. Use the dropdown menu in the field labeled Calculation Period to make your selection.

• Validation: This selection is required. The options include annual (value = 1), quarterly (value = 4), and monthly (value = 12).

Step 4: Review Your Input Data

Once all fields are completed with valid input, review them to ensure accuracy. This step is critical because these values are used in the calculation of your results.

Step 5: Calculate ROE

After entering all the necessary data, the calculator will compute the Return on Equity. The following results will be displayed:

• Return on Equity (ROE): This is shown as a percentage and is calculated using the logic: (netIncome / shareholdersEquity) * 100 * calculationType.
• ROE (Decimal): This value represents the ROE in decimal form, calculated as netIncome / shareholdersEquity * calculationType, rounded to four decimal places.
• Equity Multiplier: This ratio indicates the relationship between the company’s total assets and shareholders’ equity, calculated as 1 / (shareholdersEquity / netIncome), rounded to two decimal places.

By following these steps, you can effectively calculate the Return on Equity to make informed financial decisions regarding the company’s performance and financial health.