Company Health
What is Return on Equity?
How efficiently a company uses shareholder money to make profit
Full Explanation
ROE = net income ÷ shareholder equity. It shows how many dollars of profit a company generates per dollar of equity. Higher ROE = more efficient at turning capital into profit.
Real-World Example
Company earns $20M on $100M equity → ROE of 20%.
Pro Tip
ROE above 15% is often cited as strong — but always compare within the same sector. Capital-light industries (software, finance) naturally have higher ROEs. Also watch out for artificially inflated ROE caused by heavy debt or share buybacks reducing the equity base.
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