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Return on Equity Formula

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Return on Equity is a financial metric that evaluates the profitability of an investment property by comparing its net income to the equity invested by the property owner. Check FAQs

ROE = \frac{AR}{TE}

ROE - Return on Equity?AR - Annual Return?TE - Total Equity?

Return on Equity Example

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Here is how the Return on Equity equation looks like with Values.

Here is how the Return on Equity equation looks like with Units.

Here is how the Return on Equity equation looks like.

0.373 = \frac{87650}{235000}

0.373 = \frac{87650}{235000}

0.373 = \frac{87650}{235000}

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Return on Equity Solution

Follow our step by step solution on how to calculate Return on Equity?

FIRST Step Consider the formula

ROE = \frac{AR}{TE}

Next Step Substitute values of Variables

∴

ROE = \frac{87650}{235000}

Next Step Prepare to Evaluate

∴

ROE = \frac{87650}{235000}

Next Step Evaluate

∴

ROE = 0.372978723404255

LAST Step Rounding Answer

∴

ROE = 0.373

Return on Equity Formula Elements

Variables

Return on Equity

Return on Equity is a financial metric that evaluates the profitability of an investment property by comparing its net income to the equity invested by the property owner.

Symbol: ROE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Return on Equity

Annual Return

Annual Return refers to the total percentage change in the value of an investment property over a year, considering both rental income and any capital appreciation or depreciation.

Symbol: AR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Annual Return

Total Equity

Total Equity is the difference between the property's market value and the outstanding mortgage or debt, representing the owner's ownership stake or net worth in the property.

Symbol: TE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Total Equity

Other formulas in Important Formulas of Mortgage and Real Estate category

Go Monthly Mortgage Payment

p = \frac{MA \cdot R \cdot {(1 + R)}^{n}}{{(1 + R)}^{n} - 1}

Go Debt Ratio

DR = \frac{TD}{TA}

Go Rental Yield

RY = (\frac{ARI}{PV}) \cdot 100

Go Price per Square Foot

P sqf = \frac{PSP}{T sqf}

How to Evaluate Return on Equity?

Return on Equity evaluator uses Return on Equity = Annual Return/Total Equity to evaluate the Return on Equity, The Return on Equity is the difference between the property's market value and the outstanding mortgage or debt, representing the owner's ownership stake or net worth in the property. Return on Equity is denoted by ROE symbol.

How to evaluate Return on Equity using this online evaluator? To use this online evaluator for Return on Equity, enter Annual Return (AR) & Total Equity (TE) and hit the calculate button.

FAQs on Return on Equity

What is the formula to find Return on Equity?

The formula of Return on Equity is expressed as Return on Equity = Annual Return/Total Equity. Here is an example- 0.372979 = 87650/235000.

How to calculate Return on Equity?

With Annual Return (AR) & Total Equity (TE) we can find Return on Equity using the formula - Return on Equity = Annual Return/Total Equity.

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Return on Equity Formula

Return on Equity Example

Return on Equity Solution

Return on Equity Formula Elements

Other formulas in Important Formulas of Mortgage and Real Estate category

How to Evaluate Return on Equity?

FAQs on Return on Equity

Variable Name