What is 'Return On Average Equity  ROAE'
Return on average equity (ROAE) is an adjusted version of the return on equity (ROE) measure of company profitability, in which the denominator, shareholders' equity, is changed to average shareholders' equity. Typically, return on average equity refers to a company's performance over a fiscal year, so the averageequity denominator is usually computed as the sum of the equity value at the beginning and end of the year, divided by two.
BREAKING DOWN 'Return On Average Equity  ROAE'
A measure of return on average equity can give a more accurate depiction of a company's corporate profitability, especially in instances where the value of the shareholders' equity has changed considerably during a fiscal year. In situations where the shareholders' equity does not change or changes by very little during a fiscal year, the ROE and ROAE numbers should be identical, or at least similar.

Return On Equity  ROE
The amount of net income returned as a percentage of shareholders ... 
Equity
Equity is the value of an asset less the value of all liabilities ... 
Equity Derivative
A derivative instrument with underlying assets based on equity ... 
Shareholder Value Transfer  SVT
A metric intended to guide shareholders in how much equity compensation ... 
Reference Equity
The underlying equity that an investor is seeking price movement ... 
Equity Multiplier
The ratio of a company’s total assets to its stockholder’s equity. ...

Investing
How Return On Equity Can Help You Find Profitable Stocks
It pays to invest in companies that generate profits more efficiently than their rivals. This is where ROE comes in. 
ETFs & Mutual Funds
Profitability Indicator Ratios: Return On Equity
By Richard Loth (Contact  Biography)This ratio indicates how profitable a company is by comparing its net income to its average shareholders' equity. The return on equity ratio (ROE) measures ... 
Markets
Analyzing UPS's Return on Equity (ROE) (UPS)
Learn about UPS's return on equity (ROE), an important metric for investors. It is useful to compare the historical ROE and in relation to peers. 
Investing
ROA And ROE Give Clear Picture Of Corporate Health
Both measure performance, but sometimes they tell a very different story. This is why they’re best used together. 
Managing Wealth
Analyzing Microsoft's Return on Equity (ROE) (MSFT)
Discover a detailed analysis of Microsoft's historical return on equity, and learn how its ROE stacks up to its competitors in the tech industry. 
Investing
Calculating the Equity Risk Premium
Equity risk premium is the excess expected return of a stock, or the stock market as a whole, over the riskfree rate. 
Investing
Earnings Power Drives Stocks
Internal return on investment helps determine a stock's ability to propel shareholder returns. 
Investing
Decoding DuPont Analysis
Get a deeper understanding of ROE with these threestep and fivestep calculations. 
Markets
How Do Tech Companies Measure ROA And ROE?
The return on Assets (ROA) and return on equity (ROE) are often used metrics to measure the returns generated by a company. 
Managing Wealth
Looking Deeper Into Capital Allocation
Discover how companies decide how to spend their cash in a variety of market conditions.

What level of return on equity is common for a company in the banking sector?
Discover what the average return on equity (ROE) ratio is for companies in the banking industry, and understand the significance ... Read Answer >> 
What does it signify about the state of a company if it has unusually high shareholders' ...
Understand the meaning and calculation of shareholder equity and what a high level of shareholder equity signifies about ... Read Answer >> 
How do you determine a tangible asset's useful life?
Learn what the average return on equity for a company in the chemicals sector is and what factors influence changes in the ... Read Answer >> 
What is the average return on equity for a company in the insurance sector?
Learn about the commonly used metric in valuations, return on equity, and its average value for a typical company in the ... Read Answer >> 
What is the difference between return on equity and return on capital?
Return on equity (ROE) and return on capital (ROC) measure very similar concepts, but with a slight difference in the underlying ... Read Answer >> 
Is return on sales (ROS) the same as return on equity?
Learn how to differentiate between two of the most popular ratios used in finance and accounting: return on sales and return ... Read Answer >>