Definition How much profit a company makes for every euro invested by its shareholders.
Also called ROE, Return on equity
Example A net profit of €400k with €2m of shareholders’ equity gives an ROE of 20%.
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Why it matters It shows the return owners get on their investment.
Where it is used Investor reports and company performance comparisons.
How to calculate it Net profit ÷ shareholders’ equity × 100
Worked example A net profit of €400k with €2m of shareholders’ equity gives an ROE of 20%.
