Term of the Day Friday, October 24, 2014

ROE

Definition

Return on Equity. 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 ROE in a sentence

When comparing companies within the same industry, ROE is commonly used since it is equal to a fiscal year's net income.

​ Was this Helpful? YES  NO 10 out of 10 people found this helpful.

Show more usage examples...

Featured Advertiser

Mentioned in these terms

Browse 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 average equity (ROAE) Du Pont analysis