Return on Common Equity is defined as:
Return on Common Equity = Net Income To Common / Average Total Common Equity
Return on Common Equity for IDT is calculated as follows:
Net Income [ 77.067 M ]
(/) Average Equity over Period [ 233.2 M ]
(=) Return on Common Equity [ 33.1% ]
The tables below summarizes the trend in IDT’s return on common equity over the last five years:
| Fiscal Year |
Net Income |
Average Common Equity |
Return on Common Equity |
| 2020-07-31 |
18.198 M |
55.629 M |
32.7% |
| 2021-07-31 |
81.328 M |
101 M |
80.5% |
| 2022-07-31 |
26.46 M |
162.7 M |
16.3% |
| 2023-07-31 |
36.823 M |
164.3 M |
22.4% |
| 2024-07-31 |
59.523 M |
203.1 M |
29.3% |
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 IDT Corporation below: