What Is Return on Equity ( ROE )? Definition The return on equity ratio ( ROE ratio) is calculated by expressing net profit attributable to ordinary shareholders as a percentage of the company's equity. The equity of a company consists of paid-up ordinary share capital, reserves, and unappropriated profit. This represents the total interest of ordinary shareholders in the company. The ROE ratio shows how a firm's management has been able to utilize the resources at its disposal. It is used to ... Return on Equity or ROE is one of the vital parameters for collecting information about a company. Return on equity ( ROE ) is a measure of the profitability of a business in relation to its equity. Learn how to calculate ROE , its usage, and its components with the DuPont formula. ROE is a profitability ratio that measures the ability of a firm to generate earnings from the equity of its shareholders. Return on equity ratio is a key indicator of the financial efficiency of the company and reveals how well it is utilising its capital to create profits.
