Divide net profit by shareholders equity to measure the return generated on owners capital.
The return on equity is the share of shareholders equity that net profit represents, expressed as a percentage. The same figure is also shown per 1,000 and as a "one in every N" odds statement, which is easier to reason about when the rate is very small. Absolute counts hide scale — a rate normalises the number so you can compare periods, channels or cohorts of different sizes, where higher is better.
Return on Equity
Return on Equity = Net profit ÷ Shareholders equity × 100
Return on Equity = Net profit ÷ Shareholders equity × 100 The return on equity is the share of shareholders equity that net profit represents, expressed as a percentage. The same figure is also shown per 1,000 and as a "one in every N" odds statement, which is easier to reason about when the rate is very small.
Absolute counts hide scale — a rate normalises the number so you can compare periods, channels or cohorts of different sizes, where higher is better.
This calculator takes 2 inputs: Net profit, Shareholders equity. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.