Return on Equity

Definition

ROE. A measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year's after-tax income (after preferred stock dividends but before common stock dividends) divided by book value, expressed as a percentage. It is used as a general indication of the company's efficiency; in other words, how much profit it is able to generate given the resources provided by its stockholders. investors usually look for companies with returns on equity that are high and growing.

Use Return on Equity in a sentence

There was a return on equity and that was good for us because we needed that measurement and it would work okay.

​ Was this Helpful? YES  NO 4 people found this helpful.

Their return on equity for their investment was four percent, which was better than any bond they currently held at this point.

​ Was this Helpful? YES  NO 8 people found this helpful.

The internet firm's return on equity showed that the CEO had been wise to reinvest the company's earnings into its virtual reality production line.

​ Was this Helpful? YES  NO 6 people found this helpful.

Show more usage examples...

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
return on common equity profitability