Finance
Calculate return on equity (ROE)
=B1/B2How it works in Excel
- B1 is net income.
- B2 is shareholders' equity.
- Format the cell as a percentage.
- Average equity for the year is more accurate than the ending figure.
- Heavy debt can push ROE up, so check leverage too.
The idea in general
It shows how much profit each dollar of the owners' money earned.
What I assumed
- Net income is in B1 and equity is in B2.
Check the result on your own data before relying on it.