Return on Equity (ROE) Calculator

Return on equity measures how well a company turns shareholder capital into profit, and this calculator goes a step further with DuPont decomposition to show what is actually driving the result. The headline figure alone can mislead; the real question is whether capital is being used efficiently. A hypothetical tech giant posting an average 20% ROE, for instance, is only impressive once you know how it stacks up against the broader market and how it got there.

DuPont Analysis splits ROE into three multiplicative parts: Net Profit Margin (Net Income/Sales), Asset Turnover (Sales/Average Total Assets), and Financial Leverage (Average Total Assets/Average Shareholder Equity). Multiplied together as ROE = NPM * AT * FL, they separate profitability, asset utilization, and the role of debt financing, so you can see which lever is doing the work.

A high ROE is not automatically a healthy one, because heavy financial leverage can inflate the number while quietly raising risk. The most useful comparisons are against a company's own history and its industry peers rather than a single market benchmark such as the S&P 500 average. A steady decline in ROE is a warning worth heeding unless a credible turnaround is genuinely underway.