Definition
Return on equity (ROE) is the financial ratio measuring how efficiently a company generates profit from shareholders' equity. It shows up in the paperwork: ownership, rights, and what happens when things change. Name it clearly, then let the next decision — a hire, a price, a test, or a pass — follow from that meaning.
In the room
How the word shows up in a real conversation.
A mentor asks, “What is your Return on equity (ROE)?” The useful answer is concrete: financial ratio measuring how efficiently a company generates profit from shareholders' equity. A slide title is not an answer.
Common mistake
Using Return on equity (ROE) as a label instead of a fact. If you cannot point to the evidence — a number, a customer, or a written assumption — you are using the word as jargon.
See also
Return on assets (ROA)
Financial ratio measuring how efficiently a company uses its assets to generate profit.
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Return on assets formula
Mathematical calculation for determining return on assets: Net Income / Total Assets.
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Return on assets ratio
Percentage measure of how effectively a company generates profit from its assets.
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Return on capital (ROC)
Financial metric measuring the efficiency of capital utilization in generating returns.
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