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Profitability & margins

Return on equity (ROE)

Intermediate

ROE (return on equity) measures how much profit a company generates from shareholders' equity. Example: Equity $1,000, net profit $150 → ROE = 15%. Guidance: Over the long run, 15%+ is very good. Careful though: high ROE can also come from heavy debt use — always read together with the debt-to-equity ratio.

Related terms

For educational and informational purposes — not investment advice.