Return on Common Equity is defined as:
Return on Common Equity = Net Income To Common / Average Total Common Equity
Return on Common Equity for Allianz is calculated as follows:
Net Income [ 4,027.4 B ]
(/) Average Equity over Period [ 24,433.8 B ]
(=) Return on Common Equity [ 16.5% ]
The tables below summarizes the trend in Allianz’s return on common equity over the last five years:
| Fiscal Year |
Net Income |
Average Common Equity |
Return on Common Equity |
| 2020-12-31 |
2,468.3 B |
28,070.9 B |
8.8% |
| 2021-12-31 |
2,424.6 B |
29,711.7 B |
8.2% |
| 2022-12-31 |
2,517.7 B |
26,840.3 B |
9.4% |
| 2023-12-31 |
3,216.5 B |
21,616.9 B |
14.9% |
| 2024-12-31 |
4,027.4 B |
24,433.8 B |
16.5% |
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 P/E Ratio calculation for Allianz SE below: