Return on Common Equity is defined as:
Return on Common Equity = Net Income To Common / Average Total Common Equity
Return on Common Equity for Sika Interplant Systems is calculated as follows:
Net Income [ 234.8 M ]
(/) Average Equity over Period [ 1.067 B ]
(=) Return on Common Equity [ 22.0% ]
The tables below summarizes the trend in Sika Interplant Systems’s return on common equity over the last five years:
| Fiscal Year |
Net Income |
Average Common Equity |
Return on Common Equity |
| 2020-03-31 |
70.014 M |
496 M |
14.1% |
| 2021-03-31 |
118.4 M |
584.7 M |
20.3% |
| 2022-03-31 |
165.4 M |
711.1 M |
23.3% |
| 2023-03-31 |
87.893 M |
816.6 M |
10.8% |
| 2024-03-31 |
193.6 M |
942.2 M |
20.5% |
Return on equity represents the percentage return a company generates on the money shareholders have invested.
The Net Income used in
the numerator is often adjusted for one-time and non-recurring items to present a clearer view of future earnings. Since income is earned over the course of a year, we average book value of Common Equity at the start and end of the year for the denominator.
In general, a higher return on equity suggests management is utilizing the capital invested by shareholders efficiently.
Click the link below to download a spreadsheet with an example Return on Common Equity calculation for Sika Interplant Systems Ltd below: