Free · Equity investment calculators 📈

Profit, Turnover & Leverage Return Calculator

Decompose return on equity into profit margin, asset turnover and the equity multiplier.

  • Formula & worked example
  • Private in your browser
  • No signup
Go to tool

Calculator inputs

Loading calculator…

How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Edit a calculated value to solve backwards, or lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

Sales of 1,000, net income of 100, assets of 500 and equity of 250 give a 10% margin, asset turnover of 2 and an equity multiplier of 2 (each displayed as 200% in the default units). Their product is ROE of 40%.

ROE = (net income ÷ sales) × (sales ÷ assets) × (assets ÷ equity)

Worked example

Enter these known values and leave the other values blank.

Sales
1000 USD
Net income
100 USD
Total assets
500 USD
Total equity
250 USD
Net profit margin
10 %
Total asset turnover
200 %
Financial leverage
200 %
Return on equity (ROE)
40 %

Assumptions and limitations

  • Sales and assets cancel algebraically when the same values are used throughout. A displayed 200% means a ratio of 2; convert all displayed percentages to fractions before multiplying. Use matching periods and consistent average or ending balances. The decomposition explains a ratio; it does not establish that higher financial leverage is desirable.
  • Use consistent units, dates and financial definitions. The calculated result follows the stated assumptions and the amounts entered.

Common questions

Why does the product match net income divided by equity?

Sales and assets cancel algebraically when the same values are used throughout. A displayed 200% means a ratio of 2; convert all displayed percentages to fractions before multiplying. Use matching periods and consistent average or ending balances. The decomposition explains a ratio; it does not establish that higher financial leverage is desirable.

References

The calculation equations, inverse formulas, units, and input rules were imported from this source. Bookify provides the interface and equation solver.

Explore equity investment calculators 📈 or browse all finance calculators.