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ROE Calculator

Calculate Return on Equity (ROE), Return on Assets (ROA), and DuPont breakdown. Analyze company profitability and shareholder returns. Free financial metrics tool.

Last revised 2 August 2026

By Team GlobalCalqulate · About our editorial standards

Financial Inputs

Net Income ($)

Company's net profit after taxes and interest.

Shareholder Equity ($)

Total shareholders' equity (assets minus liabilities).

Total Assets ($)

Total assets of the company.

Revenue ($, for DuPont)

Total revenue/sales for the period. Only needed for the DuPont breakdown.

Round To (Decimal Places)

Financial Disclaimer: This result is an educational estimate produced by applying a standard formula to the figures you entered. It is not an offer, a quotation, or financial advice: real costs and returns depend on a provider's pricing, fees and underwriting, and on circumstances this calculator does not collect. Confirm the figures with the provider or a qualified adviser before acting on them. Full disclaimer.

Sources & methodology

Formula:: Return on equity
Reference:: CFA Institute
Content last updated:: August 2026
Scheduled re-verification:: August 2027

Calculation type: Exact calculation. Figures are taken from CFA Institute — see sources below.

Your entries stay on this device. This calculator runs entirely in your browser — the figures you type are not sent to us or to anyone else. The page itself uses cookies for analytics and advertising, described in the privacy policy.

Formula & methodology

Formula used

Return on equity

ROE % = net income ÷ shareholder equity × 100

How much profit the company generates for each unit of shareholder capital.

Return on assets

ROA % = net income ÷ total assets × 100

Profit generated per unit of everything the company owns, regardless of how it was financed.

DuPont decomposition

ROE = net margin × asset turnover × financial leverage

Splits ROE into profitability (net income ÷ revenue), efficiency (revenue ÷ assets) and leverage (assets ÷ equity), showing which of the three drives the return.

Variable definitions

Symbol	Meaning	Unit
net income	Net income. profit after all expenses and tax	currency
equity	Shareholder equity. total assets less total liabilities	currency
assets	Total assets. everything the company owns	currency
revenue	Revenue. total sales for the period, needed for the DuPont split	currency

Step-by-step calculation

1. Enter net income and shareholder equity
Both come from the same reporting period. Equity cannot be zero.
2. Add assets and revenue for the DuPont breakdown
Without revenue the decomposition cannot separate margin from turnover.

Limitations

Uses period-end equity rather than average equity. Analysts often prefer the average of opening and closing equity when equity moved sharply during the year.
A high ROE driven by leverage is not the same as a high ROE driven by margin — read the DuPont split before drawing conclusions.
Negative or near-zero equity makes ROE meaningless rather than excellent.

This page is educational. It applies a standard formula to the figures you enter and shows the arithmetic behind the result. It is an estimate, not an offer, a quotation or financial advice: real costs depend on the provider's pricing, fees and underwriting, and on circumstances this calculator does not collect.

Sources & references

Financial Ratio Analysis — Return on Equity and DuPont decomposition — CFA Institute

Help & FAQs

Frequently Asked Questions

Clear answers to common questions to help you use this calculator confidently.

What is ROE (Return on Equity) and why does it matter?

Tap to view the answer

ROE measures how efficiently a company uses shareholder capital to generate profit. Formula: (Net Income ÷ Shareholder Equity) × 100. It matters because investors want to know how effectively management deploys their money—higher ROE generally indicates better capital allocation and profitability.

What is a good ROE percentage?

Tap to view the answer

A good ROE depends on industry. Tech companies: 20%+ is good, utilities: 12% is good, manufacturing: 15% is strong. Generally, 15-20% is solid, 20%+ is excellent, below 10% is concerning. Always compare within your company's sector for accurate assessment.

What's the difference between ROE and ROA?

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ROE focuses on shareholder returns (Net Income ÷ Equity), while ROA measures total asset efficiency (Net Income ÷ Assets). ROE is higher for leveraged companies, ROA is more conservative. Use ROE for shareholder analysis, ROA for operational efficiency. The ratio between them reveals financial leverage.

What is the DuPont Analysis for ROE?

Tap to view the answer

DuPont breaks down ROE into three drivers: Profit Margin (Net Income ÷ Revenue) × Asset Turnover (Revenue ÷ Total Assets) × Financial Leverage (Total Assets ÷ Equity). This calculator computes the full breakdown once you enter Revenue — it helps diagnose whether ROE comes from strong operations, efficient asset use, or simply high debt.

Can ROE be negative, and what does that mean?

Tap to view the answer

Yes, if a company is unprofitable (negative net income), ROE becomes negative — signaling the company lost shareholder wealth that period. ROE also becomes mathematically meaningless for companies with negative shareholder equity (liabilities exceed assets); use ROA or ROIC instead in that case.

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How to Use This Calculator

Enter Net Income

The company's net profit (after all expenses, taxes, and interest). Found on the income statement.

Enter Shareholder Equity

Total equity available to common shareholders. Found on the balance sheet as total assets minus total liabilities.

Enter Total Assets and Revenue (optional)

Total assets enables ROA and the DuPont financial-leverage component. Revenue is needed for the full DuPont breakdown (profit margin and asset turnover) — both are found on the balance sheet and income statement.

Review Results

See ROE, ROA, and — when revenue is entered — the DuPont breakdown showing the three drivers: profit margin, asset turnover, and financial leverage.

Understanding Your Results

ROE (Return on Equity)
Net Income ÷ Shareholder Equity. Measures how effectively a company generates profit from shareholders' investments. 15-20%+ is generally considered excellent.
ROA (Return on Assets)
Net Income ÷ Total Assets. Shows how efficiently a company uses its assets. 5%+ is decent; 10%+ is strong. Independent of debt levels.
DuPont Analysis
Breaks ROE into three components: Net Profit Margin (Net Income ÷ Revenue) × Asset Turnover (Revenue ÷ Total Assets) × Financial Leverage (Total Assets ÷ Equity). Requires entering Revenue. Reveals whether ROE comes from strong operations or simply high debt.
ROIC (approximate)
This calculator approximates ROIC as Net Income ÷ Total Assets, since true ROIC needs after-tax operating profit (NOPAT) and invested capital (equity + interest-bearing debt), which aren't collected here. Treat it as a rough estimate, not an exact figure.

Key Tips

✓
ROE = Net Income / Shareholder Equity. A company with $100K income on $500K equity has 20% ROE.
✓
A high ROE from high leverage (debt) is riskier than high ROE from high margins. DuPont analysis reveals the source.
✓
Always compare ROE and ROA within the same industry. A 10% ROE is great for utilities but poor for software.
✓
Beware of negative equity companies — ROE becomes meaningless. Use ROA or ROIC instead.

Understanding ROE and ROA

What is Return on Equity (ROE)?

ROE measures the profit generated for each dollar of shareholders' equity. It's the single most watched metric by equity investors because it shows how effectively management is using shareholder capital. A company with 20% ROE generates $0.20 in profit for every $1 of equity. Warren Buffett famously considers sustained high ROE (15%+ over many years) as one of his key investment criteria.

ROE vs ROA — The Leverage Effect

ROE and ROA tell different stories when a company uses debt. ROA shows operational efficiency regardless of financing. A company with 12.5% ROA is using its assets well. If that same company has an ROE of 20%, the difference (7.5%) comes from financial leverage — using debt to amplify returns. High ROE with low ROA signals heavy debt, which increases risk during downturns.

DuPont Analysis — Finding the Source of ROE

The DuPont formula decomposes ROE into Net Profit Margin (Net Income ÷ Revenue), Asset Turnover (Revenue ÷ Total Assets), and Financial Leverage (Total Assets ÷ Equity) — multiplied together, they equal ROE. A retailer with 3% margin but 3x turnover can achieve the same ROE as a software company with 30% margin but 0.3x turnover. Comparing the two components reveals which strategy the company uses. High leverage is the most fragile source of ROE — when revenue drops, leveraged companies still owe their debt payments.

Comparing ROE Across Companies

Always compare ROE within the same industry — capital-intensive businesses (utilities, manufacturing, banks) structurally run lower ROE than capital-light ones (software), so a 10% ROE can be strong for one sector and weak for another. Use a multi-year trend (3–5 years) rather than a single year, since one-time gains or losses can distort a single period's net income. If shareholder equity is negative, ROE becomes mathematically meaningless — look at ROA or ROIC instead.

Formula & methodology

Formula used

Return on equity

ROE % = net income ÷ shareholder equity × 100

How much profit the company generates for each unit of shareholder capital.

Return on assets

ROA % = net income ÷ total assets × 100

Profit generated per unit of everything the company owns, regardless of how it was financed.

DuPont decomposition

ROE = net margin × asset turnover × financial leverage

Splits ROE into profitability (net income ÷ revenue), efficiency (revenue ÷ assets) and leverage (assets ÷ equity), showing which of the three drives the return.

Variable definitions

Symbol	Meaning	Unit
net income	Net income. profit after all expenses and tax	currency
equity	Shareholder equity. total assets less total liabilities	currency
assets	Total assets. everything the company owns	currency
revenue	Revenue. total sales for the period, needed for the DuPont split	currency

Step-by-step calculation

1. Enter net income and shareholder equity
Both come from the same reporting period. Equity cannot be zero.
2. Add assets and revenue for the DuPont breakdown
Without revenue the decomposition cannot separate margin from turnover.

Limitations

Uses period-end equity rather than average equity. Analysts often prefer the average of opening and closing equity when equity moved sharply during the year.
A high ROE driven by leverage is not the same as a high ROE driven by margin — read the DuPont split before drawing conclusions.
Negative or near-zero equity makes ROE meaningless rather than excellent.

Calculator inputs

Financial Inputs

Your results

Sources & methodology

Formula & methodology

Formula used

Return on equity

Return on assets

DuPont decomposition

Variable definitions

Step-by-step calculation

Limitations

Sources & references

What is ROE (Return on Equity) and why does it matter?

What is a good ROE percentage?

What's the difference between ROE and ROA?

What is the DuPont Analysis for ROE?

Can ROE be negative, and what does that mean?

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Calculator inputs

Financial Inputs

Your results

Sources & methodology

How to Use This Calculator

Example: Net Income $100K, Equity $500K, Assets $800K, Revenue $1M

Understanding Your Results

Key Tips

Understanding ROE and ROA

What is Return on Equity (ROE)?

ROE vs ROA — The Leverage Effect

DuPont Analysis — Finding the Source of ROE

Comparing ROE Across Companies

Formula & methodology

Formula used

Return on equity

Return on assets

DuPont decomposition

Variable definitions

Step-by-step calculation

Limitations

Sources & references

How to Use This Calculator

Example: Net Income $100K, Equity $500K, Assets $800K, Revenue $1M

Understanding Your Results

Key Tips

Understanding ROE and ROA

What is Return on Equity (ROE)?

ROE vs ROA — The Leverage Effect

DuPont Analysis — Finding the Source of ROE

Comparing ROE Across Companies