Return on equity - BV of Equity year N or year N-1

CFA Level II Equities
#1

ROE = E1/B0 (E1 is found in the IS end of year 2016 for example, B0 is in the BS end of year 2015 )

Or

ROE = E0/B0 (E0 is found in the IS end of year 2016 for example, B0 is in the BS end of year 2016 )

I suppose we want to calculate the ROE of year 2016.

#2

For accounting:

ROE1 = E1 / ((B0 + B1) / 2)

For residual income:

ROE1 = E1 / B0

#3

Thank you.

#4

You’re welcome.