Return on Tangible Equity ROTE
Profit earned on shareholders' equity after stripping out goodwill and intangibles — a stricter return measure.
What it is
Return on tangible equity (ROTE) measures net income against tangible equity, which is shareholders' equity minus goodwill and other intangible assets. It shows the return a company earns on the hard, physical capital owners actually funded. It is a tougher version of return on equity (ROE).
Why it matters
Companies that grow by acquisition pile up goodwill, which inflates equity and makes ordinary ROE look lower than the underlying business really is. ROTE removes that distortion and is widely used to compare banks and serial acquirers. A high ROTE signals the core operations generate strong returns on real capital.
How it's calculated
Divide net income (often income available to common shareholders) by average tangible common equity, where tangible equity equals total equity minus goodwill and intangible assets (and minus preferred equity when isolating common holders).
How Quintarthai uses it
Equity, net income, goodwill, and intangibles needed for ROTE are shown on the Financials and Ratios tabs of a company deep-analysis page.