ROE
#24GUIDING QUESTION
What return do shareholders get?
Return on equity.
01.What it is
It measures net income relative to equity.
02.Component masses
- Net income
- Equity
03.Formula
MAIN FORMULA
ROE: Net income ÷ Equity(%)
04.Interpretation
- > 15% excellent; 5–10% acceptable; low/negative → warning.
05.Related to
- ROA
- ROIC
- Financial leverage