### FRReturnOnEquity (NetProfit, TotalEquity)

Basic and Crystal syntax.

##### Format

`FRReturnOnEquity(NetProfit, TotalEquity)`

##### Arguments

- NetProfit is a Number or formula. NetProfit is the amount of earnings a company earns during the year from the sale of its products or services minus all the expense items. It is the bottom line figure in a company's income statement. Some analysts may want to use the net profit before extraordinary items and/or income taxes for calculating this ratio.
- TotalEquity is a Number or formula. In general, TotalEquity consist of common stocks, preferred stocks, capital surplus, and retained earnings in a company's balance sheet.

##### Action

FRReturnOnEquity returns the ratio between NetProfit and TotalEquity (for example, ReturnOnEquity = NetProfit / TotalEquity).

##### Typical uses

This ratio is used to measure the returns on the total capital employed to run the company. The higher the result, the higher the return.

##### Examples

The following examples are applicable to both Basic and Crystal syntax:

`FRReturnOnEquity(34.5,150)`

Returns 0.23.

`FRReturnOnEquity(12, 15)`

Returns 0.8.

Note: None of the arguments can be negative; you may have to check for negative values before passing the arguments.

##### Comment

FRReturnOnEquity is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. It can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.

Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.

Seagate Software, Inc. http://www.seagatesoftware.com Please send comments to: techpubs@seagatesoftware.com