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QuestionsCategory: Financials QuadrantReturn on Equity Calculation
Thomas asked 2 years ago

I got a question to ask regarding the ROE formula. While the formula states that it is “NPAT/ Shareholder’s Equity”, the NPAT should be the one that is “attributable to shareholders” or just NPAT before it split into both owners’ of parent company & non-controlling interest.

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1 Answers
Victor Chng answered 2 years ago

Hi Thomas,
You should take NPAT attributed to shareholders. 
Split does not affect your calculation of ROE as the denominator for EPS and Equity per share is same. 

Thomas replied 2 years ago

Got it!! Thanks for the clarification.

Victor Chng replied 2 years ago

Welcome :)