## About This Tool

The online Return On Equity Calculator is used to calculate the return on equity (ROE) ratio.

## Return On Equity Definition

Return on equity (ROE) is equal to a fiscal year's net income (after preferred stock dividends but before common stock dividends) divided by total equity (excluding preferred shares), expressed as a percentage. It measures the rate of return on the ownership interest of the common stock owners and measures a company's efficiency at generating profits from every unit of shareholders' equity.

## Return On Equity Formula

The Return On Equity calculation formula is as following:

Return on Equity = Net Income after Tax / Shareholder's Equity

## References

- http://en.wikipedia.org/wiki/Return_on_equity