Dr. Paul Borosky, DBA, MBA
Business Consultant & Author
Guide 29 of 34 · Financial Ratios
ROA vs. ROE: What’s the Difference?
31% or 152%? Same company. Same year. Same profit.
Apple earned $112.0 billion in fiscal 2025. Divide by its assets and you get a 31% return. Divide by its equity and you get 152%. One of those numbers describes the business. The other mostly describes Apple’s stock buybacks. This guide shows you which is which.
Last Updated: 10/27/2026 · Written by Dr. Paul Borosky, DBA, MBA
The Short Answer
What Is the Difference Between ROA and ROE?
Textbook Definition
Return on assets (ROA) divides net income by total assets. Return on equity (ROE) divides net income by shareholders’ equity. ROA measures profit on everything a company controls. ROE measures profit on the owners’ stake alone.
In Plain English
ROA asks how much profit the whole company squeezes out of what it owns. ROE asks how much profit the owners earn on their own money. Same top number, different bottom number. The bottom number is where the trouble hides.
Return on Assets
Net Income ÷ Total Assets
Apple, fiscal 2025: 31.2%
Return on Equity
Net Income ÷ Shareholders’ Equity
Apple, fiscal 2025: 151.9%
Net income comes from the bottom of the income statement. Assets and equity come from the balance sheet. Same numerator, two denominators, two very different stories.
One Real Company
Apple’s ROA and ROE, 2021 to 2025
Watch the equity row. Assets sat near $350 billion the whole time. Equity bounced between $51 billion and $74 billion. A small denominator is what pumps up ROE.
| Line | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Net income | 112,010 | 93,736 | 96,995 | 99,803 | 94,680 |
| Total assets | 359,241 | 364,980 | 352,583 | 352,755 | 351,002 |
| Shareholders’ equity | 73,733 | 56,950 | 62,146 | 50,672 | 63,090 |
| Return on assets | 31.2% | 25.7% | 27.5% | 28.3% | 27.0% |
| Return on equity | 151.9% | 164.6% | 156.1% | 197.0% | 150.1% |
Source: Apple Form 10-K filings, fiscal 2021 to 2025, as analyzed in the book. $ millions.
The Method
How to Read ROA and ROE Together in 5 Steps
Calculate both.
Same net income on top. Total assets on the bottom for ROA, shareholders’ equity for ROE.
Divide ROE by ROA.
The answer is the equity multiplier. Most healthy companies land around 2 or 3. Apple sits near 5 to 7.
Ask why equity is small.
Two reasons: heavy borrowing or heavy buybacks. Apple’s debt ratio fell from 35.5% to 27.5%, so here it is mostly buybacks.
Trust ROA for business quality.
ROA cannot be inflated by shrinking equity. Apple’s 31% is excellent on its own.
Break ROE apart before you quote it.
The DuPont method splits ROE into margin, turnover, and leverage, so you can see what is driving it.
Why the Book Gives Apple’s ROE a C+
Not because Apple is weak. Because the number misleads. A 152% ROE implies a company five times better than Microsoft at 30%. Both earn similar profits. The book grades ROE low to make a point every investor should remember: never admire a return on equity without first asking how big the equity base is. The full breakdown is in DuPont analysis.
Compare It
Apple vs. Microsoft: Five Times the ROE Is Not Five Times the Business
| Latest fiscal year | Apple | Microsoft |
|---|---|---|
| Net income | $112B | $102B |
| Total assets | $359B | $619B |
| Total equity | $74B | $343B |
| Return on assets | 31% | 17% |
| Return on equity | 152% | 30% |
Microsoft’s fiscal year ends in June, Apple’s in September.
Apple does lead on ROA, about twice Microsoft’s, because it stays asset-light. That edge is real. The fivefold ROE gap is mostly equity size, not business quality.
The Buyback Math
How Buybacks Turn a Great ROE Into a Misleading One
Apple spends $78 billion to $95 billion a year buying back its own stock. Every dollar spent on a buyback comes out of equity. That is why Apple’s retained earnings are negative and why its equity is a sliver of its assets. The full story is in where stock buybacks go on the cash flow statement.
Shrink the bottom of a fraction and the answer balloons, even if the top stays the same. Run a simple test with Apple’s fiscal 2025 profit:
Beginner Traps
What Do Beginners Get Wrong About ROA and ROE?
- Quoting ROE without looking at the equity behind it.
- Assuming a higher ROE always means a better business.
- Forgetting that debt and buybacks both shrink equity.
- Comparing ROE across companies with very different leverage.
- Ignoring ROA because it looks smaller and less exciting.
- Treating a negative or tiny equity base as normal.
How the Book Grades Apple’s Returns
From the Book
The Truth Behind 152%
Profitability Ratios · Return on Equity
The Buyback Math
When you shrink the bottom of a fraction, the result balloons. So a big part of this sky-high return on equity is the buyback math at work, not raw profitability alone.
Every ratio in the book comes with the story behind the number, not just the number. Get the full Apple analysis.
Get the Book on Amazon →Bringing This Home
Small business ROE gets distorted too: an owner who pulls every dollar out can show a sky-high return on almost no equity. Pull too much and the cushion disappears, which is why how much cash reserve to keep matters. Want a second set of eyes on your returns? See fractional CFO services.
Beyond the Book
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ROA and ROE Questions
What is the difference between ROA and ROE?
Is a high ROE always good?
Why is Apple’s return on equity so high?
Which is better for comparing companies, ROA or ROE?
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Related Guides
New to a term? Check the financial statements glossary.
Written by Dr. Paul Borosky, DBA, MBA, business consultant, author, and adjunct finance instructor with an MBA focused in finance.
This page is for general educational purposes only. It is not investment, financial, tax, accounting, or legal advice, and nothing here is a recommendation to buy or sell any security. Apple and Microsoft figures come from their public filings as analyzed in the book. Apple and Microsoft are trademarks of their respective owners, and this page is not affiliated with or endorsed by either company.