# How to calculate the average shareholder's equity?

#### yufeiluo

The average shareholders' equity calculation is the beginning shareholders' equity plus the ending shareholders' equity, divided by two. The resulting formula is:

(Beginning shareholders' equity + Ending shareholders' equity) ÷ 2 = Average shareholders’ equity

The concept may be built directly into the return on equity formula, where the average is stated in the denominator, as follows:

Net income ÷ ((Beginning shareholders' equity + ending shareholders' equity) ÷ 2) = Return on equity

Take `aapl`'s financial statements as an example:
I download and format the raw data (delete items unrelated with the roe calculate ) as below:

income statement ----income statement

Code:
``````+------------------------------+--------+--------+
| year                         | 2022   | 2021   |
+------------------------------+--------+--------+
| net income                   | 99803  | 94680  |
+------------------------------+--------+--------+``````
balance statement ----balance sheet

Code:
``````    +------------------------------+---------+---------+
| year                         | 2022    | 2021    |
+------------------------------+---------+---------+
| common stock                 | 64849   | 57365   |
+------------------------------+---------+---------+
| retained earnings            | -3068   | 5562    |
+------------------------------+---------+---------+
| comprehensive income         | -11109  | 163     |
+------------------------------+---------+---------+
| shareholders' equity         | 50672   | 63090   |
+------------------------------+---------+---------+``````
main ratios [ratios]----ratios
Code:
``````+--------------------------+---------+---------+
| year                     | 2022    | 2021    |
+--------------------------+---------+---------+
| return on equity (roe)   | 160.90% | 144.10% |
+--------------------------+---------+---------+``````
We get all numbers to calculate roe on 2022:

Code:
``````    Net income = 99803  (2022)
Beginning shareholders' equity =  63090 (2021)
ending shareholders' equity = 50672  (2022)

Return on equity on 2022 = Net income ÷ ((Beginning shareholders' equity + ending shareholders' equity) ÷ 2)
= 99803 ÷ ((63090+50672) ÷ 2)
= 175%``````
And 99803/50672 = 197%.

How can the webpage say aapl's roe on 2022 is 160.90% ?