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Herbalife Ltd (NYSE:HLF)
Return on Equity
440.70% (As of Sep. 2016)

Return on equity is calculated as net income divided by its average shareholder equity. Herbalife Ltd's annualized net income for the quarter that ended in Sep. 2016 was $351 Mil. Herbalife Ltd's average shareholder equity for the quarter that ended in Sep. 2016 was $80 Mil. Therefore, Herbalife Ltd's annualized return on equity (ROE) for the quarter that ended in Sep. 2016 was 440.70%.

HLF' s Return on Equity Range Over the Past 10 Years
Min: 54.76   Max: 3071.43
Current: 3071.43

54.76
3071.43

During the past 13 years, Herbalife Ltd's highest Return on Equity (ROE) was 3071.43%. The lowest was 54.76%. And the median was 80.16%.

HLF's Return on Equity is ranked higher than
100% of the 1561 Companies
in the Global Household & Personal Products industry.

( Industry Median: 7.76 vs. HLF: 3071.43 )

Definition

Herbalife Ltd's annualized Return on Equity (ROE) for the fiscal year that ended in Dec. 2015 is calculated as

ROE=Net Income (A: Dec. 2015 )/( (Total Equity (A: Dec. 2014 )+Total Equity (A: Dec. 2015 ))/ 2 )
=339.1/( (-334.4+-53.5)/ 2 )
=339.1/-193.95
=N/A %

Herbalife Ltd's annualized Return on Equity (ROE) for the quarter that ended in Sep. 2016 is calculated as

ROE=Net Income (Q: Sep. 2016 )/( (Total Equity (Q: Jun. 2016 )+Total Equity (Q: Sep. 2016 ))/ 2 )
=350.8/( (35.5+123.7)/ 2 )
=350.8/79.6
=440.70 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

In the calculation of annual return on equity, the net income of the last fiscal year and the average total shareholder equity over the fiscal year are used. In calculating the quarterly data, the Net Income data used here is four times the quarterly (Sep. 2016) net income data. Return on Equity is displayed in the 15-year financial page.


Explanation

Return on Equity (ROE) measures the rate of return on the ownership interest (shareholder's equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity (also known as net assets or assets minus liabilities). ROE shows how well a company uses investment funds to generate earnings growth. ROEs between 15% and 20% are considered desirable.

The factors that affect a company’s Return on Equity (ROE) can be illustrated with the Du Pont Formula:

Return on Equity (ROE)(Q: Sep. 2016 )
=Net Income/Average Shareholder Equity
=350.8/79.6
=(Net Income / Revenue)*(Revenue / Average Total Assets)*(Average Total Assets / Average Equity)
=(350.8 / 4488)*(4488 / 2573.25)*(2573.25 / 79.6)
=Net Profit Margin*Asset Turnover*Leverage Ratio
=7.82 %*1.7441*32.3273
=Return on Assets*Leverage Ratio
=13.64 %*32.3273
=440.70 %

Note: The Net Income data used here is four times the quarterly (Sep. 2016) net income data. The Revenue data used here is four times the quarterly (Sep. 2016) revenue data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

With this breakdown, it is clear that if a company grows its Net Profit Margin, its Asset Turnover, or its Leverage, it can grow its return on equity.


Be Aware

The net income used here is the net income to common shareholders.

Because a company can increase its return on equity by having more financial leverage, it is important to watch the leverage ratio when investing in high ROE companies. Like ROA, ROE is calculated with only 12 months data. Fluctuations in company’s earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Asset light businesses require very few assets to generate very high earnings. Their ROEs can be extremely high.


Related Terms

Return on Assets, Return on Tangible Equity, Return on Tangible Assets, Return on Capital, Return on Capital - Joel Greenblatt, Total Equity


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Herbalife Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
ROE 54.7671.42104.3467.6669.2080.1698.34111.42284.520.00

Herbalife Ltd Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
ROE 0.000.000.000.000.000.000.006,722.81-182.47440.70
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