What is return on equity?
Return on equity (ROE) is net income divided by shareholders' equity, shown as a percentage.[S1] Net income is the bottom line: what a company earned or lost after all costs and income tax.[S2] Shareholders' equity is what would be left for the owners if the company sold its assets and paid its liabilities.[S2]
How is return on equity worked out?
ROE = net income for 12 months ÷ shareholders' equity × 100.[S1]
Microsoft's net income was $133.7B (FY2026). Its shareholders' equity was $470.5B (Sep 30, 2026). The two cover different dates, so Cityfort lists both and does not divide them.
Where do you find it in a 10-K or 10-Q?
Net income is on the income statement. Shareholders' equity is on the balance sheet.[S2] In a 10-K, both are in Item 8.[S3] In a 10-Q, they are in Part I, Item 1.[S4]
A 10-Q shows net income for the quarter and the year to date. A 12-month figure is optional there.[S5] A separate statement or a note explains what moved equity in the period, such as net income and dividends.[S6]
What does return on equity leave out?
- Debt. ROE equals return on assets times total assets ÷ equity.[S1] More liabilities against the same equity raise that multiplier.[S2]
- Money paid out. Dividends and buybacks lower equity.[S2][S7] The same net income then gives a bigger percentage.
- Negative equity. Dell's shareholders' equity was −$1.4B (Jul 31, 2026). Its 10-Q subtracts shares it bought back inside equity.[S7] Dividing a profit by a negative number gives a negative result.
Cityfort does not call any return on equity high or low.