Measure how efficiently a company generates profit from shareholder equity. Our ROE calculator provides the full DuPont analysis breakdown, industry comparison ratings, and step-by-step calculations to help you evaluate business performance and make informed investment decisions.
See how ROE and DuPont analysis reveal insights about different companies' financial performance.
Company Profile: Apple Inc. reported net income of $96.995 billion, shareholders' equity of $62.146 billion, total assets of $352.583 billion, and total revenue of $383.285 billion for fiscal year 2023.
Analysis: Apple's exceptionally high ROE is driven by aggressive share buybacks that reduce equity, combined with strong profit margins and efficient asset utilization. The high equity multiplier indicates significant leverage through debt and liabilities.
Company Profile: Coca-Cola reported net income of $10.714 billion, shareholders' equity of $25.326 billion, total assets of $95.420 billion, and total revenue of $45.754 billion for fiscal year 2023.
Analysis: Coca-Cola's strong but more moderate ROE reflects its capital-intensive business model. The lower asset turnover is typical for beverage companies with heavy investment in bottling and distribution infrastructure. Solid profit margins and moderate leverage contribute to healthy returns.
Understanding the ROE formula and its DuPont decomposition helps you analyze what's really driving a company's returns.
Net Income = Total profit after all expenses, interest, and taxes
Shareholders' Equity = Total Assets - Total Liabilities (book value of the company)
Measures how much profit a company generates for every dollar of shareholder investment.
Profit Margin = Net Income ÷ Revenue — measures operational efficiency and pricing power
Asset Turnover = Revenue ÷ Total Assets — measures how efficiently assets generate sales
Equity Multiplier = Total Assets ÷ Shareholders' Equity — measures financial leverage
The DuPont model breaks ROE into three distinct drivers, revealing whether high returns come from operational excellence, efficient asset use, or financial leverage.
ROE benchmarks vary significantly by industry. Here's a general guide:
Below 10% — Below average. May indicate low profitability, high equity base, or operational inefficiencies.
10% - 15% — Average. Typical for many mature, stable industries.
15% - 20% — Good. Indicates strong competitive advantage and efficient capital allocation.
20% - 30% — Excellent. Companies with strong moats, often in technology or consumer brands.
Above 30% — Outstanding. May signal exceptional performance, but also could indicate high leverage or aggressive share buybacks.
Note: A very high ROE (above 50%) can sometimes be a red flag if driven primarily by excessive debt rather than operational efficiency. The DuPont analysis helps identify the source.
Return on Equity (ROE) is one of the most important financial ratios for investors and business analysts. It measures how effectively a company's management uses shareholder equity to generate profits. Expressed as a percentage, ROE tells you how much profit a company earns for every dollar of equity invested by shareholders.
For example, an ROE of 20% means the company generates $0.20 of profit for every $1.00 of shareholder equity. This makes ROE a powerful tool for comparing the profitability of companies within the same industry and for evaluating management's ability to deploy capital efficiently. Warren Buffett, one of the most successful investors of all time, has consistently emphasized ROE as a key metric in his investment analysis.
While the basic ROE calculation is useful, the DuPont analysis provides a much deeper understanding by breaking ROE into three components. This decomposition, developed by the DuPont Corporation in the 1920s, reveals whether high returns come from strong operational performance (profit margin), efficient asset utilization (asset turnover), or financial leverage (equity multiplier). A company with high ROE driven primarily by a high equity multiplier may be taking on excessive debt, which increases financial risk. Conversely, high ROE driven by strong profit margins and efficient asset turnover suggests sustainable competitive advantages.
Return on Equity is a critical metric for several reasons. For investors, it helps identify companies that generate strong returns on invested capital, which is a hallmark of businesses with sustainable competitive advantages or "economic moats." Companies with consistently high ROE (15% or more) tend to outperform the market over the long term, as they have demonstrated the ability to reinvest profits at attractive rates of return.
ROE varies significantly across industries due to differences in capital intensity, profit margins, and leverage. Here are typical ROE ranges for major sectors based on recent market data:
Disclaimer: This Return on Equity calculator is for educational and planning purposes only. Calculations are based on the inputs you provide and are intended to give you a general understanding of a company's financial performance. Actual financial results may vary due to accounting methods, non-recurring items, share buybacks, stock-based compensation, and other factors not fully captured in this simplified model. This calculator does not constitute financial or investment advice. Always conduct thorough due diligence and consult with a qualified financial advisor before making investment decisions.
Important Note: All calculations are performed in your browser for privacy. No data is transmitted, stored, or shared. Refresh the page to reset all values to defaults. For best results, use the latest version of Chrome, Firefox, Safari, or Edge. Remember that ROE should be one part of a comprehensive financial analysis that includes other metrics such as debt-to-equity ratio, free cash flow, revenue growth, and price-to-earnings ratio.