How To Calculate
Return on Equity
The ratio of a company's net income to the equity of its shareholders is known as return on equity (ROE).
A company's profitability and the effectiveness of its revenue generation are measured by its return on equity (ROE).
A corporation is better at turning its equity funding into profits the higher the ROE.
Divide net income by shareholders' equity to get return on equity (ROE).
Depending on the sector or industry in which the firm works, ROEs will change.
Return on Equity = [(Net Income)/(Average Shareholders’ Equity)]
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