Question

How do you find the Total Shareholder Return for a company? If you know how, would you be able to help me figure it out for Microsoft in 2016?

Answer 1

Total shareholder return or return on equity can be calculated using the following formula:

Return on equity = Net Income/ Average Shareholder’s equity

For the Microsoft Corporation, we have following data for the year 2016:

Net income = $ 16,798,000,000

Beginning shareholder’s equity = 9,43,89,000,000

Ending shareholder’s equity = 12,14,71,000,000

Average shareholder’s equity = (94,389,000,000 + 121,471,000,000)/2

                                              = $107,930,000,000

Return on equity = $ 16,798,000,000 / $107,930,000,000

                        = 15.56%