What is ROE (Return on Equity)?
Return on equity (ROE) is a company’s net income divided by its shareholders’ equity (its liabilities subtracted from its assets). It is a measurement of how effectively a business uses equity to produce income. A higher ROE could suggest that a company’s management team is more efficient when it comes to utilising investment financing to grow their business. However, a high ROE could also mean the company has taken on a lot of debt.
ROE = Net income / Shareholders' equity
Please note that financial analyses and ratios should not be looked at in isolation when making investing decisions.
Introduction to stock trading
- What is a stock?
- Where do stocks come from?
- What is stock ownership?
- Why do people buy stocks?
- How could you lose money from buying stocks?
- What are stock markets?
- What is a stock broker?
- What is a stock price?
- What is a bid-offer spread?
- What are stock charts?
- What is commission?
- What are bullish vs bearish markets?
- What is technical analysis?
- What is fundamental analysis?
- What are analyst recommendations?
- What are stock financials?
- What is EPS (earnings per share)?
- What is a P/E ratio (Price-to-Earnings)?
- What is a P/CF ratio (Price-to-Cashflow)?
- What is ROE (Return on Equity)?
- What is Market Sentiment?
- What are Market Sentiment Indicators?
- What is the VIX?
- How does News and Social Media impact stocks?