⁠Net Income / Average Shareholders' Equity⁠ (ROE) Ratio

[bwzheng2010]

📊 Net Income / Average Shareholders' Equity⁠ (ROE) Ratio

1. What is the ROE Ratio?

The Return on Equity (ROE) ratio measures a company’s ability to generate profit from its shareholders’ equity.

Formula:

$$ ROE = \frac{\text{Net Income}}{\text{Average Shareholders' Equity}} $$

• Net Income = net income available to common stockholders.
• Average Shareholders’ Equity = (Beginning Equity + Ending Equity) ÷ 2.

Why it matters:

• Higher ROE → more efficient use of equity.
• Compare across peers in the same industry.
• Track over multiple quarters/years for consistency.

2. How to Get ROE Ratio Using defeatbeta-api

import defeatbeta_api
from defeatbeta_api.data.ticker import Ticker

# Create a Ticker instance
ticker = Ticker("TSLA")

# Fetch quarterly ROE ratio
df = ticker.roe()
print(df.to_string())

Sample Output:

report_date	net_income_common_stockholders	beginning_stockholders_equity	ending_stockholders_equity	avg_equity	roe
2023-09-30	1.851000e+09	5.113000e+10	5.346600e+10	5.229800e+10	0.0354
2023-12-31	7.927000e+09	5.346600e+10	6.263400e+10	5.805000e+10	0.1366
2024-03-31	1.432000e+09	6.263400e+10	6.437800e+10	6.350600e+10	0.0225
2024-06-30	1.400000e+09	6.437800e+10	6.646800e+10	6.542300e+10	0.0214
2024-09-30	2.167000e+09	6.646800e+10	6.993100e+10	6.819950e+10	0.0318
2024-12-31	2.314000e+09	6.993100e+10	7.291300e+10	7.142200e+10	0.0324
2025-03-31	4.090000e+08	7.291300e+10	7.465300e+10	7.378300e+10	0.0055
2025-06-30	1.172000e+09	7.465300e+10	7.731400e+10	7.598350e+10	0.0154

3. How defeatbeta-api Implements the ROE Ratio

The roe() method works in several steps:

1. Extract financial data

   • net_income_common_stockholders (income statement)
   • stockholders_equity (balance sheet)

2. Filter data

   • Exclude TTM values
   • Use quarterly data only

3. Align quarterly reports

   • Ensure continuous quarters
   • Match net income with equity

4. Compute beginning & ending equity

   • Use SQL LAG() to get beginning equity
   • Current quarter = ending equity

5. Calculate average equity

$$ \text{Average Equity} = \frac{\text{Beginning Equity} + \text{Ending Equity}}{2} $$

6. Compute ROE

$$ ROE = \frac{\text{Net Income}}{\text{Average Equity}} $$

The calculation pipeline is executed using DuckDB SQL queries, and results are returned as a Pandas DataFrame for easy analysis.