How do you calculate a stock's return on equity (ROE)?
1 answer
by
roderick_marquardt ,
2 years ago
@keshawn
To calculate a stock's return on equity (ROE), you need to divide the net income of the company by its average shareholders' equity. Here's the formula:
ROE = (Net Income / Average Shareholders' Equity) * 100
To calculate average shareholders' equity, you add the shareholders' equity at the beginning and end of the period and divide it by two.
Net income can be found on the company's income statement, and shareholders' equity can be found on the balance sheet.
15