Metrics & KPIsReturn on Equity (ROE)
Definition
One of the most important profitability metrics is return on equity (or ROE for short). Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet. By measuring how much earnings a company can generate from equity, ROE offers a gauge of profit-generating efficiency. ROE helps investors determine if a company is a lean, mean profit machine or an inefficient clunker. Firms that do a good job of milking profit from th
Formula
(Net income) divided by (Total equity)
Tags
efficiency, SLA, Service Level Agreement, cash, profit, capital, investment, balance sheet, equity, debt, earning, income, cost, growth