Return on equity (ROE)
Return on equity (ROE) measures how much profit a company generates for each dollar of shareholders’ equity.
Return on equity (ROE) is net income divided by shareholders’ equity, expressed as a percentage. An ROE of 20% means the company earned $0.20 of profit for every $1 of equity capital. It is a widely used measure of profitability and how efficiently a company uses the money shareholders have invested.
A consistently high ROE can signal a durable, well-run business with a competitive advantage. But ROE can be inflated by heavy debt (which shrinks the equity base), so it is best read alongside leverage measures like debt-to-equity and alongside return on assets (ROA).
Related profitability measures used on stocks-llm include ROA (return on assets) and ROIC (return on invested capital). All are delayed data, shown with their as-of date.
See more terms in the stocks-llm glossary.
Informational only — NOT financial advice. This is an educational definition, not a recommendation to buy or sell anything. Metrics on stocks-llm are delayed data and may be missing or stale. Always verify information independently and consult a qualified financial professional before making any investment decision.