TL;DR
ROE (Return on Equity) and ROA (Return on Assets) are two key metrics that measure a company's profitability performance. For instance, Turkish Airlines had a ROE of 19.25% in 2022 and a ROA of 12% in 2023, indicating efficient use of its equity and assets.
8 min readHow to calculate Return on Equity and Return on Assets. Interpretation and sector comparison.
ROE and ROA
This metric is a key component of fundamental analysis. It should be evaluated alongside the P/E ratio and P/B ratio.
How to Calculate
See our financial statement analysis guide for calculation details. Stock valuation methods use this metric alongside other measures.
Application on BIST
Filter by this metric in Borsafolio's stock screener. Each stock detail page provides quarterly financials and comparative metrics.
Screen BIST stocks by financial metrics.
Open Stock Screener →Related articles: Fundamental Analysis Guide, P/E Ratio, P/B Ratio, Financial Statements.
Frequently Asked Questions
What is ROE?
ROE is a profitability measure that shows how efficiently a company uses its equity. It is calculated by dividing net profit by total equity. For example, if a company has a net profit of 1 million TL and total equity of 5 million TL, ROE is 20%.
What is ROA?
ROA is a financial metric that measures the profit generated from a company's total assets. It is calculated by dividing annual net profit by total assets. For instance, if a company has net profit of 1 million TL and total assets of 10 million TL, ROA is 10%.
How is ROE calculated?
ROE is calculated by dividing net profit by total equity. For example, if a company has a net profit of 2 million TL and total equity of 8 million TL, ROE would be 25%.
How is ROA calculated?
ROA is calculated by dividing annual net profit by total assets. For example, if a company has a net profit of 500 thousand TL and total assets of 4 million TL, ROA would be 12.5%.
What is the difference between ROE and ROA?
ROE measures the efficiency of equity usage, while ROA measures the efficiency of total asset usage. A high ROE indicates effective use of equity, whereas a high ROA indicates effective use of assets.
This content does not constitute investment advice. Past performance is not a guarantee of future results. Make your investment decisions based on your own risk profile.
