Return on Equity (ROE)
Measure a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.
Profit after taxes & interest, over a full fiscal year.
Total Assets - Total Liabilities. (Use average of beginning and ending equity for more accuracy).
Return on Equity (ROE)
20.00%
Status: Good / Strong
Understanding ROE
ROE tells you how efficiently a company is using the equity (money) contributed by shareholders to generate profit. An ROE of 15% means the company generates ₹0.15 of profit for every ₹1 of equity.
Warning: The Debt Trap
A very high ROE (e.g., 40%) isn't always good. Because Equity = Assets - Debt, a company can artificially inflate its ROE simply by borrowing massive amounts of money (increasing debt drastically reduces equity, which is the denominator). Always check the Debt-to-Equity ratio alongside ROE!