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How to calculate Return on equity

The Return on equity formula, with plain worked examples you can check yourself.

Return on equity = NI ÷ E × 100

The result is a percentage (%).

Worked examples

NI = 210 · E = 700 · A = 1750Return on equity = 30%
NI = 180 · E = 600 · A = 1200Return on equity = 30%
NI = 100 · E = 1000 · A = 2000Return on equity = 10%

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Multiply by 100 to show the answer as a percentage.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Investing & Returns.

Related terms

EquityDividendBondHedgingArbitrageLeverage

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