Article content

Return On Equity

Return on equity (ROE) ratio measures the ability of a company to generate profits from its shareholders investments in the company. The return on equity ratio shows how much profit each dollar of common stockholders’ equity generates.

The return on equity ratio formula is calculated by dividing net income by shareholder’s equity.

Return on Equity = Net Income / Shareholder’s Equity

Investors track return on equity because it shows how effective management is at using investors money to fund operations and grow the company.

<< Back to Glossary Index
Make money swing trading without being chained to your computer. Join today! Jason Bond Picks

Sofi AI Market Sentiment Gauge

SOFI artificial intelligence market gauge

Picture of SOFI artificial intelligence

Market is overbought.