| Return on Equity (ROE) is a financial metric used to evaluate a company's profitability by measuring how much profit it generates with the money shareholders have invested. It is calculated by dividing a company's net income by its shareholder's equity. ROE can be used to indicate how well a company uses its investors' money to produce profits. A high ROE may suggest that a company is efficient and profitable, while a low ROE may indicate that a company is not generating sufficient profits. Investors should also be aware that a high ROE may not always be sustainable, as it may be the result of a one-time event or a short-term strategy. Therefore, it is essential to look at a company's historical ROE and how it compares to its industry peers over time. |
