Return On Equity (ROE)

Ratio: Net Income as a percentage of the Shareholders’ Equity.

Example: The Round Number Company

Net Income = 30; Shareholder Equity = 140

Return on Equity = 30/140 = 21%

ROE measures how effectively the Shareholders’ investment has been put to work to create profit.

Also known as Return on Investment.

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Return On Equity (ROE)

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