Asset & Equity Returns Calculator

How the asset & equity returns calculator works

Average assets = (beginning assets + ending assets) ÷ 2; average equity uses the same two-point convention. ROA is period net income divided by average assets, and ROE is net income divided by average signed equity. Both are displayed as percentages.

Losses remain negative. Zero average assets or equity gives an undefined ratio, shown as a dash. Negative equity is accepted and explicitly flagged: it can reverse signs and produce a positive ROE from a loss, which is not evidence of a healthy return on positive capital.

Use consistent consolidated balances and the same earnings period. The model does not annualize short periods, remove exceptional items, calculate tax or adjust for intra-period funding. A two-date average can conceal large changes between those dates.

Worked example

Net income of 50,000, assets rising from 400,000 to 600,000, and equity rising from 200,000 to 300,000 give average assets of 500,000 and average equity of 250,000. ROA is 10% and ROE is 20%. A 25,000 loss with those balances gives −5% ROA and −10% ROE.

Sources and assumptions

The source material explains the underlying calculation or pricing structure. Entered prices, costs, schedules and scenario choices are your assumptions; this tool does not obtain supplier quotes or predict actual results.

• CFI: Return on assets and average assets