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ROE=(Earning available for common stockholders)/(common stock equity)

Return on Equity is a measure of the returns generated by every share of common stock of a company. High ROE does not mean any immediate benefits but an increasing ROE year-on-year means that the company is doing well and is able to grow on its profits.

Formula:

ROE = Net Income / No. of Shares

Net Income - This is the total income of the company after paying preferred stock dividends

No. of Shares - This is the total number of common shares in the market (Does not include Preferred Shares)

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13y ago

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Where can a person find an explanation detailing the definition of return on equity?

The definition of return on equity is the amount of net income returned as a percentage of shareholders equity. More information can be found at Investopedia and Wikipedia.


Both return on asset and return on equity measure profitability which one is more useful for comparing two companies why?

Return on asset= profit margin × asset turnover Return on equity= return on asset × equity multiplier so, return on equity is more comprehensive


Is return on equity a profit or dividend?

Return on equity is influenced by profits and not from dividends.


Difference between retrun on equity and return on capital employed?

return on capital employed (ROCE) is net income/(debt&equity) whereas return on equity is income/equity (without debt).


return on equity?

this ratio shows how much income is generated by equity of the company. it is a great contributor towards profitability of a company. return on equity is calculated as follows:Return on equity = (Net income / Total equity) x 100


What is the difference between return on equity and return on net worth?

Return on equity is the rate of returns you earned on your equity investments Return on net worth is the rate at which your entire property is growing (Your net worth is the sum of all your assets - all your liabilities)


Is there any relationship between return on equity and dividend yield?

if there is no growth in a firm the return of equity is equal to the dividend yield


How can one calculate and find the return on common stockholders equity for a company?

To calculate the return on common stockholders' equity for a company, you can use the formula: Net Income / Average Common Stockholders' Equity. Net income is the profit the company makes, and average common stockholders' equity is the average value of the shareholders' equity over a period of time. This ratio helps measure how effectively a company is generating profits from the shareholders' equity invested in the business.


What is a leverage multiplier ratio?

the return on equity divided by the return on assets


How is the accounting rate of return on stockholders investments measured?

return on equity


What is the equity of a commercial bank?

return investment


Return on equity equals return on assets?

When the debt ratio is zero