MathLiveReturn on equity
Return on equity expresses a company's net income as a percentage of shareholders' equity, showing how effectively it generates profit from the owners' invested capital. It is used when comparing the profitability of businesses and assessing management performance.
\mathrm{ROE} = \frac{\mathrm{net\ income}}{\mathrm{equity}} \times 100\%What the symbols mean
| Net income of the company over a period, in currency units | |
| Shareholders' equity, typically averaged over the period, in currency units |
About this formula
- FieldEconomics and finance
- TopicFinancial ratios
- LevelUniversity
- Also calledROE, return on equity ratio, ROE formula, net income over equity, profitability ratio equity
- SourceWikidata Q591174
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