No. Although ROE is always computed as income/invested capital, no agreement exists concerning the definition of either the numerator or the denominator.

• For the numerator, Offtoa uses Income After Taxes. However, other valid computations of ROE use (a) EBITDA or (b) EBIT.
• For the denominator, Offtoa uses Total Shareholder Equity. However, other valid computations of ROE use (a) Long-Term Debt plus Total Shareholder Equity, (b) Total Liabilities plus Total Shareholder Equity, (c) Long-Term Debt plus Total Shareholder Equity less Preferred Shares, (d) Total Liabilities plus Total Shareholder Equity less Preferred Shares. The argument for including debt is that for many start-up companies, debt is convertible debt, and thus is equivalent to equity.

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