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Return on Equity (ROE) Calculator with DuPont Analysis, Margin, Turnover and Leverage

Calculate ROE from net income and equity, then break it into its three drivers: profit margin, asset turnover, and equity multiplier. Built for business analysis, equity research, and performance review.

ROE %
DuPont breakdown
Benchmark view
Sensitivity table
What this calculator does
Primary KPI
ROE %
Model
DuPont
Net income divided by shareholder equity
Margin, turnover, and leverage driver analysis
Quick benchmark classification for weak, acceptable, and strong ROE
Sensitivity view for revenue and net income changes
Currency
📈
Return on Equity (ROE) Calculator
Mode 1: Core ROE Inputs
$
Net income after tax and after interest.
$
Total sales or turnover for the period.
$
Average assets for the period is best, but end-period assets can be used for a simple view.
$
Average equity is best, but end-period equity works for a simplified read.
view
For labeling only. Core formula remains the same.
Mode 2: Direct DuPont Inputs
$
Numerator for ROE and net margin.
$
Used for net margin and asset turnover.
$
Used for asset turnover and leverage.
$
Used for equity multiplier and final ROE.
focus
Used only in the interpretation layer.
Method note
ROE measures how efficiently equity capital generates profit. In DuPont form, ROE equals net profit margin multiplied by asset turnover multiplied by equity multiplier.
Return on Equity
—
net income as a % of shareholder equity
Return on Equity
—
net income divided by equity
Net Profit Margin
—
net income as a % of revenue
Asset Turnover
—
revenue divided by assets
Equity Multiplier
—
assets divided by equity
Net Income
—
profit after tax
Revenue
—
sales used in DuPont analysis
Shareholder Equity
—
capital base attributed to owners
Net Profit Margin
—
Net income ÷ Revenue
×
Asset Turnover
—
Revenue ÷ Assets
×
Equity Multiplier
—
Assets ÷ Equity
Performance Side
Net income—
Revenue—
Profit margin—
Asset efficiency—
Capital Structure Side
Total assets—
Equity base—
Leverage—
ROE classification—
Weak
< 10%
Usually indicates low profitability, weak asset use, or both. Can still be acceptable in some sectors, but it is not a strong shareholder return profile.
Acceptable
10% to 20%
Often seen as a workable or solid range. Interpretation depends on industry structure, cyclicality, and the amount of leverage used.
Strong
20%+
Can signal strong economics, but a very high ROE should also be checked for leverage distortion. High leverage can make ROE look better than the business quality really is.
Full ROE Breakdown
Net income—
Revenue—
Total assets—
Shareholder equity—
Net profit margin—
Asset turnover—
Equity multiplier—
Implied leverage pressure—
Return on equity—
Sensitivity Table
Scenario Net Income Revenue Profit Margin ROE
DuPont Driver Comparison
Profit Margin
Asset Turnover
Equity Multiplier
ROE
A high ROE is not automatically high quality. If equity is small because leverage is high, ROE can look strong while risk also rises. That is why the DuPont breakdown matters.
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📌 What this covers

ROE % from income and equity
Net margin driver
Asset turnover driver
Equity multiplier driver
Benchmark interpretation
Revenue and income sensitivity

Related Calculators

ROI Calculator→ ROA Calculator→ Gross Profit Calculator→ Profit Margin Calculator→ Break-even Calculator→

Related Guides

What Is ROE?→ DuPont Analysis Explained→ ROE vs ROA→

How ROE works

Return on Equity measures how much profit a company generates for each unit of shareholder equity. It is one of the most watched profitability metrics in equity analysis because it connects earnings directly to the owners’ capital base.

The basic formula is simple, but interpretation is stronger when you split ROE into its underlying drivers using the DuPont framework.

The core formulas

ROE = Net Income ÷ Shareholder Equity × 100
Net Profit Margin = Net Income ÷ Revenue
Asset Turnover = Revenue ÷ Total Assets
Equity Multiplier = Total Assets ÷ Shareholder Equity
In DuPont form, ROE = Net Profit Margin × Asset Turnover × Equity Multiplier. This helps separate business quality from leverage effects.

Why DuPont analysis matters

Two companies can have the same ROE and still be very different. One may earn it through strong margins and efficient asset use. Another may reach the same ROE mainly by running high leverage. That is why looking only at the headline ROE can be misleading.

Driver What It Measures Why It Matters
Net profit marginHow much profit remains from each revenue unitShows pricing power, cost control, and overall profitability
Asset turnoverHow efficiently assets generate revenueShows operating efficiency and capital intensity
Equity multiplierHow much assets are supported by equityShows leverage and capital structure pressure

How to interpret ROE

A higher ROE is usually better, but context matters. Capital-light businesses can naturally produce higher returns than asset-heavy businesses. A very high ROE also needs to be checked for leverage distortion, especially if equity is thin relative to assets.

That is why a balanced ROE, supported by healthy margins and decent turnover, is usually stronger than a leverage-driven ROE alone.

Frequently Asked Questions

What is a good ROE?+
A rough rule of thumb is that less than 10% is weak, 10% to 20% is acceptable to solid, and above 20% is strong. But the right comparison is always within the same industry and business model.
Why can a company have high ROE but still be risky?+
Because leverage can raise ROE by shrinking the equity base. If equity is small relative to total assets, the same profit level can produce a higher ROE, but the balance sheet risk is also higher.
What is the difference between ROE and ROA?+
ROE measures return on shareholder equity. ROA measures return on total assets. ROA ignores the benefit or distortion created by leverage, while ROE includes it.
Can ROE be negative?+
Yes. If net income is negative and equity is positive, ROE is negative. That means the business destroyed value relative to the owners’ capital during the period.
Why use average equity instead of ending equity?+
Average equity is often more representative because equity can change during the year through retained earnings, buybacks, dividends, or capital raises. Using average balances can make ROE more stable and accurate.