What is 'ROE'?

Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity. Because shareholders' equity is equal to a company's assets minus its debt, ROE could be thought of as the return on net assets. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Return on Equity – ROE Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity. Because shareholders' equity is equal to a company's assets minus its debt, ROE is considered the return on net assets. ROE is considered a measure of how effectively management is using a company's assets to create profits. Read More » Related to "Return on Equity – ROE" How ROA and ROE Give a Clear Picture of Corporate Health Both return on equity (ROE) and return on assets (ROA) measure performance, but sometimes they tell a very different story. This is why they're best used together. Read More » How Return on Equity Can Help Uncover Profitable Stocks It pays to invest in companies that generate profits more efficiently than their rivals. This is where ROE comes in. Read More » SPONSORED BY US Bank Your Finances, Your Way Planning ahead is the key to reaching your goals. These tips and tricks can help you manage your money and make smart financial decisions. Learn More » Decoding DuPont Analysis Get a deeper understanding of ROE with these three-step and five-step DuPont analysis calculations. Read More » NEW Podcast: The Investopedia Express with Caleb Silver Big tech stocks have lost their luster as investors rotate into cyclicals hoping that the recovery is real. We go inside the leading economic indicators to look for signs of strength. Listen now on: Apple Podcasts » Spotify » Google Podcasts » Related Definitions Net Income Net income is equal to net earnings calculated as sales minus cost of goods sold, selling, general, and other expenses Read More » Shareholder Equity Shareholder equity (SE) is the owner's claim after subtracting total liabilities from total assets. Read More » Income Statement An income statement is one of the three major financial statements that reports a company's financial performance over a specific accounting period. Read More » Balance Sheet A balance sheet is a financial statement that reports a company's assets, liabilities and shareholders' equity at a specific point in time. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy