return on equity
(Economics) percentage of profits that were obtained from investment in a company's shares over a given period of time (measure the efficiency of the use of funds from shares)
Return on equity
Return on Equity (ROE, Return on average common equity, return on net worth) measures the rate of return on the ownership interest (
shareholders' equity) of the common stock owners. ROE is viewed as one of the most important
financial ratios. It measures a firm's efficiency at generating profits from every dollar of net assets (assets minus liabilities), and shows how well a company uses investment dollars to generate earnings growth. ROE is equal to a
fiscal year's
net income (after preferred stock dividends but before common stock dividends) divided by total equity (excluding preferred shares), expressed as a percentage.
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Return on equity (ROE)
Indicator of
profitability. Determined by dividing
net income for the past 12 months by
common stockholder equity (adjusted for stock splits). Result is shown as a percentage. Investors use R.O.E. as a measure of how a company is using its money. R.O.E. may be decomposed into
return on assets (R.O.A.) multiplied by financial leverage (total assets/total equity).
Return on Equity
a measure of a firm's profitability; profit achieved in a given period is expressed as a percentage of the total amount invested in the firm by its owners.
Return On Equity (ROE)
A measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year's after-tax income (after preferred stock dividends but before common stock dividends) divided by book value, expressed as a percentage. see also equity, profitability.
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