# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ROE

This is the percentage a company earns on its total equity in a given year (Year 1, 2, etc.). The calculation is return on assets times financial leverage.

Return on equity shows how much profit a company generates on the money shareholders have invested in the firm. The mission of any company is to earn a high return on equity. The company's net income is found in the annual income statement. The company's net worth is taken from the company's annual balance sheet.

For example, a major pharmaceutical company earned an incredible 37% on its shareholders' equity. For every $1 shareholders had invested in the company, the company produced $0.37 worth of profit.

Sponsors Center
Sponsored Links