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
balance statement ----balance sheet
main ratios [ratios]----ratios
We get all numbers to calculate roe on 2022:
And 99803/50672 = 197%.
How can the webpage say aapl's roe on 2022 is 160.90% ?
(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 |
+------------------------------+--------+--------+
Code:
+------------------------------+---------+---------+
| year | 2022 | 2021 |
+------------------------------+---------+---------+
| common stock | 64849 | 57365 |
+------------------------------+---------+---------+
| retained earnings | -3068 | 5562 |
+------------------------------+---------+---------+
| comprehensive income | -11109 | 163 |
+------------------------------+---------+---------+
| shareholders' equity | 50672 | 63090 |
+------------------------------+---------+---------+
Code:
+--------------------------+---------+---------+
| year | 2022 | 2021 |
+--------------------------+---------+---------+
| return on equity (roe) | 160.90% | 144.10% |
+--------------------------+---------+---------+
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%How can the webpage say aapl's roe on 2022 is 160.90% ?