Worksheet model used to calculate Return on Investment (ROI) and Return on Equity (ROE) that also provides easy methods of changing input values and seeking a final ROE.
You can develop a model of your business with an Excel workbook. This model calculates ROE, ROI, profit margin and asset turnover. Once the model is developed, you can try various what if scenarios. You can use Goal Seek functions to solve the model for a desired output (ROE). By adjusting different inputs to the ROE calculation, you can better understand the financial structure and opportunities facing the business. Notes like those inserted in cells N13, N15, Q14 and X18 describe methods of increasing ROE.
Enter starting values in column B. Click the reset buttons to show ROE for the input values. Click on the spinner buttons to change assumptions and use the reset buttons to return to the original values. Enter a desired ROE in cell M4 and click on the Seek button -- choose which input variable you want to change to solve for the desired ROE.
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