ROE and ROA explained with Uzbek company reports

Profit on its own does not tell you whether a company is good at making money. A profit of 10 billion soʻm is impressive for a small workshop and weak for a large plant. Two ratios put profit in proportion: return on equity (ROE) and return on assets (ROA). Both can be calculated from the two reports every Uzbek company that reports under the national accounting standards (NSBU, in Uzbek BHMS) files: the balance sheet (Form 1) and the report on financial results (Form 2). This guide shows how, with worked examples, and explains why the two ratios should be read together.

The formulas

• ROE = net profit ÷ shareholders' equity × 100%. Net profit is line 270 of Form 2. Equity is line 480 of Form 1, the total of the owners' funds.
• ROA = net profit ÷ total assets × 100%. Total assets are line 400 of Form 1.

Both forms, with these line codes, are set by the Regulation on the deadlines, structure and content of financial statements, registration No. 3567, in force since 1 January 2025 (lex.uz, as of 26 September 2026). The figures on the forms are in thousands of soʻm, but because ROE and ROA are ratios, the unit cancels out as long as you use the same unit on both sides.

ROE answers the shareholder's question: how much profit did the company earn on the money that belongs to its owners? ROA answers a broader question: how much profit did it earn on everything it controls, whether financed by owners or by lenders?

A worked example

Take a hypothetical company with the following annual figures, in thousands of soʻm. The numbers are illustrative only.

• Net profit (Form 2, line 270): 10,200,000
• Equity at the end of the year (Form 1, line 480): 130,000,000
• Equity at the start of the year: 120,000,000
• Total assets at the end of the year (Form 1, line 400): 210,000,000
• Net revenue (Form 2, line 010): 100,000,000

ROE on year-end equity is 10,200,000 ÷ 130,000,000 = about 7.8%. ROA is 10,200,000 ÷ 210,000,000 = about 4.9%.

Many analysts prefer to divide by average equity, because profit is earned over the whole year while the balance sheet shows one day. Average equity here is (120,000,000 + 130,000,000) ÷ 2 = 125,000,000, which gives an ROE of about 8.2%. Neither version is wrong. What matters is that you use the same method when you compare companies or years, and that you know which method a published figure uses.

Why ROE and ROA can tell different stories

Now take a second hypothetical company with exactly the same net profit, revenue and total assets, but financed differently: equity of 60,000,000 and liabilities of 150,000,000.

• Its ROA is the same: 10,200,000 ÷ 210,000,000 = about 4.9%.
• Its ROE is 10,200,000 ÷ 60,000,000 = 17%.

The business earns exactly the same on its assets. The second company only looks more than twice as profitable for shareholders because it borrowed more. Debt raises ROE when things go well, and it raises the risk when they do not: interest must be paid whatever happens, and a bad year hits a small equity base hard.

That is why the two ratios belong together. A high ROE with a modest ROA points to leverage. A high ROE with a high ROA points to a business that genuinely earns well on its assets.

Breaking ROE into three parts

A classic way to see where ROE comes from is to split it into three ratios, often called the DuPont breakdown:

1. Net margin = net profit ÷ revenue. For the first company: 10,200,000 ÷ 100,000,000 = 10.2%.
2. Asset turnover = revenue ÷ total assets: 100,000,000 ÷ 210,000,000 = about 0.48.
3. Equity multiplier = total assets ÷ equity: 210,000,000 ÷ 130,000,000 = about 1.62.

Multiply them: 10.2% × 0.48 × 1.62 = about 7.8%, the same ROE as before. The breakdown shows whether a change in ROE came from better pricing and cost control (margin), from using assets more intensively (turnover) or simply from more debt (the multiplier). For the second company the multiplier is 210,000,000 ÷ 60,000,000 = 3.5, which explains its whole advantage.

Common traps

• Negative or tiny equity. If a company's equity is negative because of accumulated losses, ROE has no meaningful value, and a very small positive equity can produce an absurdly high ROE. Look at the balance sheet before you trust the number.
• One-off profits. An exchange gain, an asset sale or an extraordinary item on Form 2 can inflate one year's ROE. Check lines 150, 160 and 230 before you compare years.
• Losses. A negative net profit gives a negative ROE and ROA. Remember that on Form 2 a loss is written in the expenses (losses) column without a minus sign.
• Different industries. Banks run with far more liabilities relative to equity than most industrial companies, so their ROA is naturally lower. Compare banks with banks and cement producers with cement producers.
• Inflation. Profit and equity are both in soʻm, but equity is built up over many years. When prices rise quickly, an ROE that looks healthy may be modest in real terms. Our guide on inflation and your savings explains why real returns matter.

How to use ROE in practice

A single year's ROE says little. It is more useful to:

• look at ROE and ROA over five or more years, to see whether returns are stable, rising or falling;
• compare a company with others in the same sector;
• compare ROE with what you could earn with less risk, for example on a bank deposit, keeping in mind that deposit rates move with the Central Bank's policy rate;
• read ROE together with price. A company with a high ROE can still be an expensive share, which is where the price-to-book and P/E ratios come in, covered in our P/E and dividend yield guide.

Where Finmind helps

The public stocks pages on Finmind show ROE among the key figures of each UZSE share, for example Quvasoycement (KSCM). It is the latest reported annual net profit divided by the equity reported for the same year, labelled with that fiscal year, and it is left blank when equity is zero or negative rather than shown as a misleading number. The same page lists net profit, total assets and equity, so you can calculate ROA and check the ROE yourself. To see where the inputs come from, read our guides to the balance sheet and the income statement.

This article is for education only and is not investment advice. Investing in securities involves risk, including the loss of money you invest.