Financial Glossary

Return on Equity (ROE)

Definition

ROE is a financial ratio that measures a company�s ability to generate profit from its shareholders� equity, calculated by dividing net income by shareholder equity.

Related Services

Financial reporting, investment analysis, and corporate governance services help businesses enhance their ROE by improving profitability and efficient use of equity capital.

Problem and Application

A high ROE reflects effective management and strong profit generation, while a low ROE may signal poor financial performance or an over-leveraged company.

Conclusion

ROE is a valuable measure of shareholder return and company performance, helping businesses attract investment and improve profitability.