Return on common Equity (ROE, Return on average common equity) - earnings before extraordinary items, less preferred-share dividends, divided by average common shareholders' equity. Shows the rate of return on the investment for the company's common shareholders, the only providers of capital who do not have a fixed return.

$ROE=\backslash frac\{Net\backslash \; income\}\{Sales\}\backslash times\backslash frac\{Sales\}\{Total\backslash \; Assets\}\backslash times\backslash frac\{Total\backslash \; Assets\}\{Average\backslash \; stockholders\backslash \; equity\}$

$=\backslash frac\{Net\backslash \; income\}\{Average\backslash \; stockholders\backslash \; equity\}$

(profit margin times total asset turnover times financial leverage, DuPont ratio)

ROE can be seen as a measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year's after-tax income (after preferred stock dividends but before common stock dividends) divided by total equity, expressed as a percentage.

Source

• http://gold.globeinvestor.com/public/help/flat/help_financials_report_ratios.html

Fundamental analysis | Corporate finance | Financial ratios

Eigenkapitalrentabilität | ROE | 株主資本利益率 | ROE | Oman pääoman tuottoaste | 股權收益