Return on Equity Solution

STEP 0: Pre-Calculation Summary
Formula Used
Return on Equity = Annual Return/Total Equity
ROE = AR/TE
This formula uses 3 Variables
Variables Used
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.
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.
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.
STEP 1: Convert Input(s) to Base Unit
Annual Return: 87650 --> No Conversion Required
Total Equity: 235000 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
ROE = AR/TE --> 87650/235000
Evaluating ... ...
ROE = 0.372978723404255
STEP 3: Convert Result to Output's Unit
0.372978723404255 --> No Conversion Required
FINAL ANSWER
0.372978723404255 0.372979 <-- Return on Equity
(Calculation completed in 00.004 seconds)
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Created by Keerthika Bathula
Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad
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Return on Equity Formula

Return on Equity = Annual Return/Total Equity
ROE = AR/TE

What is Return on Equity ?

Return on Equity (ROE) in real estate is a key financial metric that measures the profitability and efficiency of an investment property by comparing the net income generated by the property to the owner's equity in the property. It provides valuable insights into how effectively the property is utilizing the owner's invested capital to generate returns. A higher ROE indicates better profitability and efficient use of equity, making it a critical factor for real estate investors in evaluating the performance of their property investments and making informed decisions about portfolio management and investment strategies.

How to Calculate Return on Equity?

Return on Equity calculator uses Return on Equity = Annual Return/Total Equity to calculate 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 calculate Return on Equity using this online calculator? To use this online calculator for Return on Equity, enter Annual Return (AR) & Total Equity (TE) and hit the calculate button. Here is how the Return on Equity calculation can be explained with given input values -> 0.372979 = 87650/235000.

FAQ

What is 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 and is represented as ROE = AR/TE or Return on Equity = Annual Return/Total Equity. 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 & 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.
How to calculate 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 is calculated using Return on Equity = Annual Return/Total Equity. To calculate Return on Equity, you need Annual Return (AR) & Total Equity (TE). With our tool, you need to enter the respective value for Annual Return & Total Equity and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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