Return on Equity

What is Return on Equity?

Return On Equity (ROE) which is also known as Return On Net Worth (RONW) is a measure of your company’s profit as a percentage of the equity of shareholders, and is a good gauge of profitability.

How Do You Calculate The Return on Equity?

To calculate your return on equity, simply divide your net income by the amount of shareholder’s equity.

Return On Equity (ROE) = Net Income / Shareholders’ Equity