Definition
Return on equity ratio is the financial metric comparing net income to shareholders' equity. Treat it as a number you can compute and argue about, not a slide decoration. 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.
In a Monday review, someone writes Return on equity ratio on the board and restates it: “Financial metric comparing net income to shareholders' equity.” The next move is a test, a cut, or a double-down — not another debate about the word.
Common mistake
Using Return on equity ratio 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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