Return on Equity is a ratio of net income to shareholder equity. It is listed as a percentage.
Return on Equity = (Net Income / Shareholder’s Equity) x 100%
A company has net income of $2,100 and shareholder equity of $4,000.
Return on Equity = ($2,100 / $4,000) = 0.525 x 100% = 52.5%
Therefore, this company has a return on equity of 52.5%.