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 averageequity denominator is usually computed as the sum of the equity value at the beginning and end of the year, divided by two.
INVESTOPEDIA EXPLAINS '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 ... 
Return On Capital Employed (ROCE)
A financial ratio that measures a company's profitability and ... 
Energy Return On Investment  EROI
The amount of energy that has to be expended in order to produce ... 
Return On Assets  ROA
An indicator of how profitable a company is relative to its total ... 
Shareholders' Equity
A firm's total assets minus its total liabilities. Equivalently, ... 
Net Income  NI
1. A company's total earnings (or profit). Net income is calculated ...

Markets
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. 
Economics
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. 
Investing
Spotting Cash Cows
We show you why some of these companies stand apart from the herd. 
Investing Basics
What is the average return on equity for a company in the oil & gas drilling sector?
Investing in the oil and gas drilling sector can be a profitable endeavor for some investors, but it is first necessary to understand the sector's average ROE. 
Options & Futures
What is the average return on equity for a company in the forest products sector?
Investing in the forestry sector can provide a hedge against other asset classes, but investors should be aware of the sector's return on equity percentage. 
Fundamental Analysis
What is the difference between ROCE and ROOC?
Find out about the differences between return on capital employed and return on operating capital, two accounting ratios used in accounting and finance. 
Fundamental Analysis
What is the difference between ROCE and ROE?
Discover how investors and analysts utilize the return on equity and return on capital employed ratios to gauge financial performance. 
Fundamental Analysis
Does a high price to book ratio correspond to a high ROE?
Learn the correlation between the two equity valuations, price to book ratio and return on equity, and why it can be advantageous to use them together. 
Fundamental Analysis
What is the difference between market capitalization and market value?
Understand the difference between market capitalization and market value, including the elements used for the calculation of each type. 
Fundamental Analysis
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.