FormulaThe formula to calculate return on equity is:ROE = Annual Net Income Average Stockholders' EquityNet income is the after tax income whereas average shareholders' equity is calculated by dividing the sum of shareholders' equity at the beginning and at the end of the year by 2. The net...
Capital employed is the sum of stockholders' equity and long-term finance. Alternatively, capital employed can be calculated as the difference between total assets and current liabilities. The formula to calculate return on capital employed is:...
The CAPM Formula The capital asset pricing model (CAPM) provides the required return based on the perceived level of systematic risk of an investment:The calculation of the required return The required return on a share will depend on the systematic risk of the share. ...
Return On Assets = $213,000 / $2,283,000 ≈ 0.09 or 9%Example 2: Total liabilities and total equity of Company Y on Dec 31, 20X0 were $942,000 and $1,610,000 respectively. During the year ended Dec 31, 20X0 the company earned net income of $315,000. What were the total ...