Profitability ratios (rentabiliteit)

What does rentabiliteit (profitability) mean?

The ratio between profit and the capital invested. Return on equity (REV) and return on total capital (RTV) show how efficiently capital produces a return.

Rentabiliteit compares a chosen result with the matching capital base. The formula for equity differs from that for total capital. Preferably use average capital so that large balance sheet movements do not distort the figure.

How does it work?

Rentabiliteit expresses a result as a percentage of the capital with which it was earned. For total capital (RTV) you take the result before interest and tax and divide it by the average balance sheet total, so that the reward of all capital providers counts. For equity (REV) you divide the result after tax by the average equity.

There is no statutory formula. Book 2 of the DCC uses the word once: the management report pays attention to the circumstances on which the development of turnover and rentabiliteit depends (art. 2:391(2) DCC). Anyone who includes the ratio in the annual documents states the definition and the reconciliation to the annual accounts (RJ 430).

Example

A BV starts financial year 2026 with € 80,000 equity and a € 380,000 balance sheet total and ends with € 100,000 and € 420,000. The result before tax is € 20,000 and the tax is 19% of that (€ 3,800), leaving € 16,200; the interest expense is € 12,000. REV: 16,200 / ((80,000 + 100,000) / 2) = 16,200 / 90,000 = 18%. RTV: (16,200 + 3,800 + 12,000) / ((380,000 + 420,000) / 2) = 32,000 / 400,000 = 8%. The interest costs on average 12,000 / 310,000 = 3.9% of the debt capital. Because the RTV is above that, the loan increases the return for the shareholder.

In the annual accounts

Ratio from the P&L and balance sheet; not a mandatory separate line.

Difference from profit margin

Profit margin divides the result by turnover and says how much of each euro of sales is left. Rentabiliteit divides the same result by capital and says what each invested euro yields. A trading company with a thin margin can still achieve a high rentabiliteit if its capital turns over quickly.

Common mistakes

• Dividing result before interest by equity without explanation
• Presenting only the closing balance as the average

What to watch for

• Use the average of opening and closing capital; the closing position alone distorts the figure as soon as distributions or contributions were made during the year.
• Compare the RTV with the interest on your loans: if it is below that, debt capital costs more than it earns.
• Micro and small entities do not prepare a management report (art. 2:396(7) DCC) and do not file a profit and loss account; the rentabiliteit cannot be derived directly from their publication documents.

Legal basis and sources

no separate statutory ratio

• Dutch Accounting Standards Board (Raad voor de Jaarverslaggeving)
• KVK: financial ratios
• Belastingdienst: corporate income tax rates

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