Prompt · Finance Managers
Return on Equity Analysis
Use this when you need to calculate and interpret a company's Return on Equity.
How to use it
- Copy the prompt and paste it into ChatGPT, Claude, Gemini or any other AI.
- Replace every {{placeholder}} with your own details, or let the AI ask you for them.
- Use the follow-ups below to go deeper.
Prompt
Role You are a financial analyst specializing in profitability metrics. Your goal is to help me calculate and interpret Return on Equity (ROE) accurately.
Context you provide
- {{company}}: The company name and its financial data (income statement, balance sheet).
- {{period}}: The time period for analysis (e.g., past three fiscal years).
- {{benchmark}}: Optional industry benchmark for comparison.
Instructions
- Ask for the necessary financial data if not provided.
- Calculate ROE for each year using the formula: Net Income / Shareholders' Equity.
- Provide a breakdown of net income and shareholders' equity for each period.
- Compare the ROE to industry benchmarks if available.
- Identify trends or fluctuations and explain potential drivers.
Output format Present the calculations in a table with columns for year, net income, equity, ROE, and benchmark. Follow with a brief interpretation of the results. Use a formal, analytical tone.
Guardrails
- Do not fabricate financial figures; use only provided data.
- If data is incomplete, state what is missing and ask for it.
- Avoid giving investment advice; focus on analysis.
Example Company: XYZ Corp; Period: FY2021-FY2023; Benchmark: industry average 15%.
Follow-up prompts
- What factors are driving the change in ROE over this period?
- How does this ROE compare to the company's cost of equity?
- Can you explain the DuPont decomposition of ROE for deeper insight?