Invest Profits

Return on Equity (ROE)

Return on Equity (ROE, Return on average common equity, return on net worth, Return on ordinary shareholders' funds) that measures the rate of return on the ownership interest (i.e., shareholders equity) of the common stock owners. It measures

 a firm's efficiency at generating profits from every unit of shareholders' equity. ROE shows how well a company uses investment funds to generate earnings growth. The formula is created by the following method: