ROE & ROA Calculator (Return on Equity, Return on Assets Formula, DuPont Analysis)
Free calculator for ROE (Return on Equity) and ROA (Return on Assets). Enter net income, shareholders' equity, total assets, and revenue to instantly get both ratios plus a DuPont breakdown (net margin x asset turnover x financial leverage).
What Is ROE & ROA Calculation?
The ROE & ROA calculator lets you enter net income, shareholders' equity, total assets, and revenue to instantly compute ROE (Return on Equity), which measures profitability from the shareholders' perspective, and ROA (Return on Assets), which measures how efficiently the entire asset base generates profit. Where a net profit margin calculator shows profitability relative to sales, ROE and ROA answer a different question that matters more to investors: how efficiently is the capital tied up in the business — equity, or equity plus debt — actually being put to work?
For ROE specifically, this tool also shows the DuPont breakdown — net profit margin x asset turnover x financial leverage — so you can see exactly which of those three drivers is responsible for the ROE level you're looking at, rather than treating ROE as a single opaque number.
How to Use
- Enter net income Enter the net income figure from the income statement. If the company reported a net loss, enter it as a negative number.
- Enter shareholders' equity Enter total shareholders' equity (net assets) from the balance sheet.
- Enter total assets Enter the total assets figure from the balance sheet.
- Enter revenue Enter the revenue for the period, used to calculate the DuPont breakdown.
- Review the results ROE, ROA, and the DuPont breakdown are calculated automatically.
Tips for getting more out of it
- A high ROE isn't always good news — a company can inflate ROE simply by taking on more debt and shrinking equity (a high financial leverage ratio). Check ROA alongside ROE to see the true efficiency of the company's assets, independent of how it's financed.
- If shareholders' equity is negative (the company has negative net worth), the ROE ratio stops being meaningful, so this calculator only computes a result when equity is a positive number.
- ROE is one of the most widely used metrics in equity valuation and is often combined with P/B (price-to-book) and P/E (price-to-earnings) ratios when comparing stocks.
- When benchmarking against competitors, don't stop at a single year's ROE — look at the trend over several years and check the DuPont breakdown to see whether changes in profitability came from margin, asset efficiency, or leverage.
- ROA tends to be more stable across companies with different capital structures than ROE, because it isn't affected by how much debt a company carries. It's a useful cross-check when two companies have similar ROE but very different debt levels.
Use Cases
Stock analysis before investing
Pull the figures from a company's annual report or 10-K to quickly calculate ROE and ROA and gauge how efficiently management is using capital.
Benchmarking against competitors
Compare ROE, ROA, and the DuPont breakdown across companies in the same industry to see whether performance differences come from margin, efficiency, or leverage.
Reviewing your own company's capital structure
See how much of your ROE is being driven by financial leverage rather than operating performance, useful input for discussions about debt and capital policy.
Glossary
- ROE (Return on Equity)
- Net income divided by shareholders' equity, expressed as a percentage. Measures the return generated on the capital shareholders have invested.
- ROA (Return on Assets)
- Net income divided by total assets (debt plus equity), expressed as a percentage. Measures how efficiently the entire asset base, including borrowed capital, generates profit.
- Shareholders' equity
- The total in the equity section of the balance sheet, made up of capital contributed by shareholders plus accumulated retained earnings.
- Total assets
- The total in the assets section of the balance sheet, equal to the sum of equity and liabilities (debt).
- DuPont analysis
- A method that decomposes ROE into three multiplied factors — net profit margin, asset turnover, and financial leverage — named after the DuPont Corporation, which popularized the technique.
- Asset turnover
- Revenue divided by total assets. Measures how efficiently a company converts its asset base into sales.
- Financial leverage
- Total assets divided by shareholders' equity. A higher value means a company relies more heavily on debt financing.
Frequently Asked Questions
Side Note — Why ROE Is the Metric Investors Watch Most Closely
ROE, or Return on Equity, measures how efficiently a company turns the capital shareholders have invested into profit. While net profit margin (covered in our related calculator) measures profitability as a share of revenue, ROE takes the investor's perspective: how much did the money shareholders put into the business actually grow? It's one of the most closely watched numbers in equity investing, and legendary investors like Warren Buffett have long treated a consistently high ROE as one of the hallmarks of a quality business worth owning for the long run.
One reason ROE is so useful is that it can be decomposed using a technique called DuPont analysis, named after the DuPont Corporation, which popularized the method in the 1920s to evaluate its own business units. DuPont analysis breaks ROE into three multiplicative components: net profit margin (how much profit is kept per dollar of sales), asset turnover (how efficiently assets generate sales), and financial leverage (how much of the balance sheet is financed with debt versus equity). Two companies can post an identical ROE for completely different reasons — a retailer might run on thin margins but high inventory turnover, while a real estate company might have high margins but low turnover — and DuPont analysis is how you tell those stories apart instead of treating ROE as a single undifferentiated number.
ROA, or Return on Assets, is ROE's close cousin, but it divides net income by total assets (debt plus equity) rather than by equity alone. Because ROA isn't inflated by leverage the way ROE can be, comparing the two is a quick way to spot companies that are boosting ROE mainly by borrowing more rather than by running the business more efficiently. A company with an eye-catching ROE but a comparatively low ROA is worth a second look at its balance sheet before assuming the growth is sustainable.