ROE (Return on Equity): how to calculate and read it

ROE measures what share of shareholders’ money the company earns back in a year.

Updated：2026-11-08

Calculation

ROE = net income after tax ÷ shareholders’ equity × 100 (%). The ROE and ROA on this site are trailing four-quarter figures, calculated from the financial statements the company has published. ROA (return on assets) is net income divided by total assets.

DuPont analysis: why ROE is high

ROE can be split into three parts multiplied together:

• Net profit margin (net income after tax ÷ revenue): the ability to make money;
• Asset turnover (revenue ÷ total assets): the efficiency of using assets;
• Equity multiplier (total assets ÷ equity): financial leverage, that is, how much has been borrowed.

So the same ROE may come from a high net profit margin or from high leverage, and the risk character of the two is different; read it together with the debt ratio.

How to read it

• Look at ROE’s stability over the years and the level of the same industry; a single quarter’s figure is less informative.
• When equity is very small (or even negative), ROE is magnified or loses meaning.
• A loss-making company has a negative ROE.

Where to see it on this site

On a stock page, in the Financials tab, the “Profitability” section shows the quarterly trend of ROE and ROA (trailing four quarters).

This article only explains terms and how to calculate them. It is not investment advice.