ROE Calculator — Return on Equity with DuPont Analysis
Measure how much profit a company generates for each dollar of shareholder capital. Enter net income and equity for ROE; add revenue and total assets to see the full DuPont decomposition.
Net income earned per dollar of average shareholders' equity
- 1
Average shareholders' equity
(900 000 + 1 000 000) ÷ 2 = 950 000Averaging beginning and ending equity smooths fluctuations during the year. - 2
Net income
150 000 - 3
Return on Equity (ROE)
150 000 ÷ 950 000 × 100 = 15,79
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ROE = Net Income ÷ Average Shareholders' Equity × 100. DuPont breaks this into Net Profit Margin × Asset Turnover × Equity Multiplier, revealing whether returns come from better margins, more efficient asset use, or higher leverage. A benchmark of ≥15% ROE without excessive debt signals strong performance.
Формула
How this is calculated
Return on Equity (ROE) tells investors how effectively management is deploying the capital shareholders have entrusted to it. The formula divides net income by average shareholders' equity (averaging beginning and ending equity smooths fluctuations during the year). A higher ROE signals more profit generated per dollar of equity — though leverage (debt) can artificially inflate it, so ROE must be interpreted alongside the balance-sheet context.
The DuPont decomposition (available when you enter revenue and total assets) breaks ROE into three drivers: (1) Net Profit Margin (net income ÷ revenue) — how much of each sales dollar flows through to profit; (2) Asset Turnover (revenue ÷ total assets) — how efficiently assets generate revenue; and (3) Equity Multiplier (total assets ÷ average equity) — the leverage factor, i.e. how many dollars of assets are supported by each dollar of equity. The product of these three components equals ROE. This decomposition is invaluable for diagnosing why ROE changed between periods: did margins improve? Did the company use its assets more intensively? Or did leverage increase (which boosts ROE but adds financial risk)?
Industry context is essential. Technology and consumer-brand companies routinely post ROE of 20–40%+ on asset-light models. Capital-intensive industries (utilities, airlines, mining) hover in the 5–12% range. Banks often show high ROE because they are inherently leveraged institutions. Warren Buffett has historically favoured companies with ROE consistently above 15% without relying on excessive debt.
Поширені запитання
A common benchmark is ≥15% sustained over multiple years without excessive leverage. Technology and high-margin businesses often achieve 25–50%+. Capital-intensive industries run 5–12%. But a very high ROE driven by a high equity multiplier (heavy debt) can indicate fragility rather than genuine profitability — always check the DuPont leverage component alongside the overall number.
DuPont breaks ROE into margin × turnover × leverage. Two companies can have the same ROE for very different reasons: one might have thin margins but fast asset turnover (e.g. a supermarket), another high margins and low leverage (e.g. a software firm). DuPont pinpoints where the return comes from and reveals whether ROE has improved because of better operations (good) or because of more borrowing (risky).
ROE measures profit relative to shareholders' equity; ROA measures profit relative to all assets (debt + equity financed). The equity multiplier bridges them: ROE = ROA × equity multiplier. A company with ROE much higher than ROA is using significant leverage to amplify shareholder returns. ROA is considered the purer measure of operational efficiency because it is not inflated by debt.
Також відомий як
TG we-Calculate Editorial Team. (2026). ROE Calculator — Return on Equity with DuPont Analysis [Online calculator]. TG we-Calculate. https://we-calculate.com/uk/calculator/roe-calculator
TG we-Calculate Editorial Team. "ROE Calculator — Return on Equity with DuPont Analysis." TG we-Calculate. 2026. https://we-calculate.com/uk/calculator/roe-calculator.
TG we-Calculate Editorial Team, "ROE Calculator — Return on Equity with DuPont Analysis," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/uk/calculator/roe-calculator
@misc{wecalculate_roe_calculator, title = {ROE Calculator — Return on Equity with DuPont Analysis}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/uk/calculator/roe-calculator}}, year = {2026}, note = {TG we-Calculate} }
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