The easiest way to calculate shareholders' equity is to subtract the company's total liabilities from the total assets. It is all the money paid into the company from shareholders, plus any earnings retained.
It's easy to understand the 'net profit' part of that equation, but 'shareholders' equity' requires further explanation. Return on Equity = Net Profit ÷ Shareholders' Equityĩ.9% = CA$4.5m ÷ CA$46m (Based on the trailing twelve months to December 2018.) See our latest analysis for Swiss Water Decaffeinated Coffee How Do You Calculate Return On Equity? One way to conceptualize this, is that for each CA$1 of shareholders' equity it has, the company made CA$0.099 in profit. Swiss Water Decaffeinated Coffee has a ROE of 9.9%, based on the last twelve months. To keep the lesson grounded in practicality, we'll use ROE to better understand Swiss Water Decaffeinated Coffee Inc. While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important.
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