Return on equity, or ROE
Return on equity, or ROE, is a way to understand a company's performance. ROE measures a companies’ capability to generate profits from shareholders' equity. It’s calculated by dividing the company's net income (NI) by shareholder equity and is shown as a percentage.
ROR formula:
ROE can help investors see how effectively a company is using their assets to grow profits. For example, a high ROE may mean that a company is more efficient at generating profits from its equity financing.
We acknowledge and thank the FMA, Dr Karena Kelly and Brook Taurua Grant, the RBNZ and the Māori Dictionary for their research which helped us with te Reo Māori kupu for this glossary.
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