Financial Statement Analysis Magazine Section

Ratio - Return on Equity (ROE)

Return on Equity RatioRETURN ON EQUITY or NET WORTH (ROE):                                                                           onlinecalculator iconOnline Return on Equity Ratio Calculator

The Return on Equity (ROE) of a company measures the ability of the management of the company to generate adequate returns for the capital invested by the owners of a company. Generally a return of 10% would be desirable to provide dividents to owners and have funds for future growth of the company

The formula:

Return on Equity or Net Worth = (Net Profit / Net Worth or Owners Equity) x 100

Net Worth or Owners Equity = Total Assets (minus) Total Liability

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