companydata.dkReturn on equity (egenkapitalforrentning)
Return on equity (egenkapitalforrentning, ROE) shows how large a return the company generates on the owners' capital. It is calculated as the net result divided by equity, multiplied by 100.
Where return on assets measures the return on all assets, return on equity measures the owners' return alone. It is therefore affected by leverage: a company with little equity and much debt can show high ROE — with correspondingly high risk.
How return on equity is calculated
Return on equity = net result / equity × 100 (often using average equity in the denominator). A result of DKK 500,000 on equity of DKK 2.5 million gives a return of 20%.
Related terms
Equity (egenkapital)
Equity (egenkapital) is the difference between a company's assets and its liabilities — the owners' share of the company. It typically consists of share capital, retained earnings, and any reserves.
Net result (årets resultat)
The net result (årets resultat) is the bottom line of the financial statements: the company's total profit or loss for the fiscal year after all costs, financial items, and tax have been deducted.
Return on assets (afkastningsgrad)
Return on assets (afkastningsgrad) shows how much operating profit a company generates per krone tied up in assets. It is calculated as operating profit divided by the balance sheet total, multiplied by 100.
Solvency ratio (soliditetsgrad)
The solvency ratio (soliditetsgrad) shows how large a share of a company's assets is financed with equity. It is calculated as equity divided by the balance sheet total, multiplied by 100.