Return on Equity

Return on equity (ROE) is the amount of net income returned, as a percentage of the shareholder’s equity, also known as net assets or assets minus liabilities. Return on equity measures a corporation's profitability by showing how much profit it makes with the money that the shareholders invested. The ROE is useful for comparing the profitability of one company to that of other companies in the same industry.

Calculated as: (Net profit ÷ Owner's equity) x 100.