Enter the annual dividends ($) and the total common equity invested ($) into the Return on Common Equity Calculator. The calculator will evaluate and display the Return on Common Equity.
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Return on Common Equity Formula
The following formula is used to calculate the Return on Common Equity.
ROCE = AD / EI *100
- Where ROCE is the Return on Common Equity (%)
- AD is the annual dividends ($)
- EI is the total common equity invested ($)
How to Calculate Return on Common Equity?
The following example problems outline how to calculate Return on Common Equity.
Example Problem #1:
- First, determine the annual dividends ($).
- The annual dividends ($) is given as: 165.
- Next, determine the total common equity invested ($).
- The total common equity invested ($) is provided as: 2000.
- Finally, calculate the Return on Common Equity using the equation above:
ROCE = AD / EI *100
The values given above are inserted into the equation below and the solution is calculated:
ROCE = 165 / 2000 *100 = 8.25 (%)
Example Problem #2:
For this problem, the variables needed are provided below:
annual dividends ($) = 80
total common equity invested ($) = 500
This example problem is a test of your knowledge on the subject. Use the calculator above to check your answer.
ROCE = AD / EI *100 = ?
