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Return on equity (ROE)
Net income as a share of shareholders' equity: the formula, what distorts it, and the figure for each company.
The short answer
Return on equity is net income divided by shareholders' equity: how much profit a company earned for each dollar of book value its shareholders have in it. It's usually shown as a percentage, using a year's net income and equity at the end of that year (or the average over the year). Across the 83 companies with positive equity here, the median is 19.4%.
The formula
ROE = net income ÷ shareholders' equity
Both figures come from the 10-K: net income from the income statement, equity from the balance sheet, where it's total assets minus total liabilities. Some analysts use average equity over the year, which smooths out big changes; the table uses year-end equity for every company.
The return on equity and assets calculator works out both ratios from net income, equity and assets, or loads the figures from a covered company's 10-K.
What moves it besides profit
- Buybacks. Buying back shares reduces equity. A company that has returned more cash than it has kept can have very small, or negative, equity, which sends ROE very high or makes it meaningless.
- Debt. Borrowing instead of raising equity also shrinks the denominator, so more leverage tends to mean higher ROE for the same profit. Debt-to-equity shows how much.
- One-time items. A big gain or write-down moves net income for a single year. One-time items covers them.
- Goodwill. Acquisitions paid for in shares add goodwill and equity, which lowers ROE. Goodwill explains.
8 of the covered companies reported zero or negative shareholders' equity at their latest year end, among them AbbVie, Philip Morris International, Dell, McDonald's. That's usually the result of years of buybacks and dividends, not losses.
Every company
The highest ROE in the table is Mastercard's, at 193.5%. Comparisons work best within an industry, since banks, software companies and utilities run with very different amounts of equity.
Net income for the latest fiscal year divided by shareholders' equity at that year end, from each 10-K, sorted by ROE. Companies with zero or negative equity are left out, since the ratio isn't meaningful for them.
Common questions
How do you calculate return on equity?
Divide net income for a year by shareholders' equity, either at year end or averaged over the year, and multiply by 100 for a percentage.
Why can ROE be very high?
Often because equity is small, after years of buybacks or heavy borrowing, rather than because profit is unusually large.
What does negative shareholders' equity mean?
That total liabilities exceed total assets on the balance sheet. At large profitable companies it usually follows years of buybacks and dividends. 8 covered companies report it.
What is the difference between ROE and ROA?
ROE divides net income by shareholders' equity; ROA divides it by total assets. ROA isn't affected by how the assets are financed.
Is ROE comparable across industries?
Only loosely. Banks, utilities and software companies use very different amounts of equity and debt, so ROE is most useful within an industry.
See it side by side
The same figures for two companies at once, each linked to its 10-K:
Disclosures
- Editor holdings
- The editor holds shares of Tesla (TSLA) and SpaceX in a long-term retirement account. The editor holds no position in any other company named on this page. As of Nov 11, 2026.
- Compensation
- Nobody paid for this page. No affiliate links on this page.
- Sources
- Each company's own SEC filings, linked next to each number.
- Last updated
- Nov 10, 2026
General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.
More in Learn and Tools · Methodology & Disclosures explains where every number comes from.