In: Finance
Without exception, return on equity (ROE) is regarded are the most important measurements of a company's success, regardless of the industry of the company. Define ROE, and explain why this measurement is regarded in such high esteem in the financial world of financial statement analysis. Second, other than ROA, what financial ratio would you consider as the next most important for analyzing success of a company's performance?
Return on Equity
Return on equity measures profitability by revealing how much income it generated with the shareholders’ money.
Formula for calculating return on equity:
Return on equity= Net income/Shareholders Equity
Importance of Return on Equity:
Other financial ratios used for measuring a company’s success:
I hope that was helpful :)