Return On Average Equity - ROAE


DEFINITION of 'Return On Average Equity - ROAE'

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 average-equity 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.

  1. Return On Equity - ROE

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  2. Return On Capital Employed (ROCE)

    Return on Capital Employed (ROCE) is a financial ratio that measures ...
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  4. Return On Assets - ROA

    An indicator of how profitable a company is relative to its total ...
  5. Shareholders' Equity

    A firm's total assets minus its total liabilities. Equivalently, ...
  6. Net Income - NI

    1. A company's total earnings (or profit). Net income is calculated ...
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  1. What is the average return on equity for a company in the retail sector?

    The retail sector includes automotive; building supply; distributors; general; grocery and food; online; and special lines ... Read Full Answer >>
  2. What is the average return on equity for a company in the utilities sector?

    The average return on equity (ROE) for the utilities sector is approximately 11%. This is a little below the overall market ... Read Full Answer >>
  3. What is the formula for calculating return on equity (ROE) in Excel?

    The return on equity, or ROE, is used in fundamental analysis to measure a company's profitability. The formula to calculate ... Read Full Answer >>
  4. What is the average return on equity for a company in the automotive sector?

    As of January 2015, the average return on equity, or ROE, for companies in the automotive sector was approximately 17%, which ... Read Full Answer >>
  5. What are common growth rates that should be analyzed when considering the future ...

    Some of the most common growth rate metrics that investors and analysts consider in evaluating a company's future prospects ... Read Full Answer >>
  6. What is the average return on equity for a company in the aerospace sector?

    Investors in the aerospace sector can measure a company's return on equity to analyze its profitability before purchasing ... Read Full Answer >>

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