How to Calculate ROA and ROE Excel: Profitability Ratios

Instructions: Use this calculator to measure the return on assets (ROA) and return on equity (ROE). Please input the desire values in the form below:

Definition Return on Assets (ROA)

ROA stands for return on assets is essential ratio used to calculate the firm’s ability to generate profit by utilizing its assets.

Return on Assets (ROA) Formula

Higher the value of return on assets shows better performance of firms. This improves effectiveness which contrasts with lower ROA.

Thus, this is also a positive indication for existing shareholders and new investors to capitalize more finance into the firm stock.

Definition Return on Equity (ROE)

Return on equity is calculated; net profit divided by total shareholder’s equity. ROE is an efficiency ratio that recognizes a firm’s ability to generate profit on shareholders’ capital retained by a corporation.

Return on Equity (ROE) Formula

Higher the value of return on equity shows better performance of the firm, increasing the value return for equity shareholders.

However, lower ROE means less performance of firms, decreasing the return value for equity share investors.