ROE

#24
GUIDING 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