Calculating ROE for a banking company.... has recently made a net loss (average of past two years is also a negative figure). Shareholder equity is negative for the most recent year (avg for past 2 yrs is also negative).
ROE, based on this, is positive....... i'm assuming it's wrong. is it? what's the right way of doing this?
Many thanks
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What? ROE uses equity, not 'net equity'. Perhaps that's your problem
Net loss/equity.. Can't be positive.
If average equity is negative then ROE is a meaningless measure. Better to just "NA" it in whatever you're doing.
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