Net income divided by shareholders' equity — measures profitability relative to invested capital.
ROE shows how efficiently a company generates profit from shareholder investment. Sustained 15%+ ROE generally indicates competitive advantage. But high ROE can also reflect high leverage — always check ROE alongside debt levels.
Net income divided by shareholders' equity — measures profitability relative to invested capital. ROE shows how efficiently a company generates profit from shareholder investment. Sustained 15%+ ROE generally indicates competitive advantage. But high ROE can also reflect high leverage — always check ROE alongside debt levels.
In financial metrics, ROE (Return on Equity) is one of the building blocks investors use to compare opportunities and assess risk. Understanding it helps you read research notes, earnings reports, and market commentary without getting lost in jargon.
ROE shows how efficiently a company generates profit from shareholder investment. Sustained 15%+ ROE generally indicates competitive advantage.
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