Return on Equity (ROE) is a measure of financial performance that is calculated by dividing net income by average shareholder's equity.ROE is considered a measure of how effective management is at using equity financing to fund operations and grow the company.A higher ROE indicates that a company is earning more income per dollar of shareholder's equity.A lower ROE could suggest the opposite - that management is not effectively using a company’s assets to create profits.
Learn Return on Equity with interactive examples and practice exercises in our module.
This interactive learning module helps you understand Return on Equity through hands-on practice and real-world examples.