Glossary

Return on Equity

Return on Equity

Return on Equity

Return on Equity – Return on Equity (ROE) measures a company’s financial performance by dividing net income by shareholders’ equity. ROE is a barometer of a company’s profitability and how effectively it earns profits. It is considered as the return on net assets because shareholders’ equity equals a company’s assets less its debt.

ROE = Net Income/Shareholders’ Equity

Share


Related Links