Compute return on equity (ROE), return on assets (ROA), net profit margin and equity multiplier from one set of company figures.
Result
How to use this tool
Profit after tax for the period.
Prefer average balances for the period.
Total sales for the same period.
A wide gap signals leverage; check the multiplier before judging performance.
Formula & worked example
Net income of $50,000 on equity of $200,000 gives ROE of 25%; on assets of $500,000 ROA is 10%; on revenue of $200,000 net margin is 25%, with an equity multiplier of 2.5x.
Limitations — read this before you rely on it
Ratio arithmetic only. It does not adjust for one-off items, different accounting standards, or industry norms, and it is not investment advice.
Frequently asked questions
Return on equity: net income divided by shareholders equity. It measures profit generated from the owners capital.
Return on assets: net income divided by total assets. It measures how efficiently all assets, funded by debt and equity, generate profit.
Leverage. If assets are funded largely by debt, a small equity base can show a high ROE even with a modest ROA.
Average balances (opening plus closing, divided by two) are better, because income is earned over the whole period while a year-end balance is a single point in time.
It depends on industry, leverage and risk. Compare with peers and with the cost of equity rather than chasing a single threshold.