Return on Common Equity is defined as:
Return on Common Equity = Net Income To Common / Average Total Common Equity
Return on Common Equity for CRH is calculated as follows:
Net Income [ 3.458 B ]
(/) Average Equity over Period [ 21.23 B ]
(=) Return on Common Equity [ 16.3% ]
The tables below summarizes the trend in CRH’s return on common equity over the last five years:
| Fiscal Year |
Net Income |
Average Common Equity |
Return on Common Equity |
| 2020-12-31 |
966 M |
19.341 B |
5.0% |
| 2021-12-31 |
2.433 B |
19.944 B |
12.2% |
| 2022-12-31 |
2.712 B |
21.194 B |
12.8% |
| 2023-12-31 |
3.154 B |
21.505 B |
14.7% |
| 2024-12-31 |
3.458 B |
21.23 B |
16.3% |
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 Assets calculation for CRH PLC ADR below: