Calculating the Return on Equity (ROE)

Return on equity (ROE) is a ratio that provides investors with insight into how efficiently a company (or more specifically, its management team) is handling the money that shareholders have contributed to it.

 

In other words, it measures the profitability of a corporation in relation to stockholders’ equity. The higher the ROE, the more efficient a company's management is at generating income and growth from its equity financing.

 

Keating International can assist you in performing this calculation and establishing a dashboard to keep track on it on a regular basis for you and your company's shareholders.