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
- Write down the values for each letter in the formula.
- Do the brackets first, then divide or multiply.
- Multiply by 100 to show the answer as a percentage.
- 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
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