Return on Equity (ROE)
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Category:  
Strategic

Measures a company’s ability to generate profit from shareholders' equity.

What it Measures ?

How much return we give to our shareholders.

Relevant StakeHolders 

Investors, CFO

In-depth Use Case / Real-world Example

ROE is calculated by dividing net income by shareholders' equity. If a company has ₹200,000 in profit and ₹1,000,000 in equity, the ROE is 20%. It measures how well a company uses its equity to generate returns. A higher ROE indicates better management and utilization of shareholder investments.

KPI Definition

Business Value

Movement Direction

Sample Formula

Net Income / Shareholders' Equity

Should Aim For
1
2
3
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