Return on Equity


Return on Equity (ROE) is a measure of how well a company generates profits in relation to the money invested by its shareholders. It shows the percentage of net income that the company earns for each dollar of shareholders’ equity.

To calculate ROE, divide the company’s net income by the shareholders’ equity and multiply by 100. A higher ROE indicates that the company is more efficient in using its shareholders’ investment to generate profits.

ROE is commonly used by investors to evaluate a company’s profitability and compare it with similar companies in the industry. However, it’s important to consider other financial factors and industry benchmarks when assessing a company’s overall financial health.

Further Explanation

Return on Equity (ROE) is a financial metric that measures the profitability and efficiency of a company in generating returns for its shareholders. It indicates the percentage of net income generated by a company in relation to the shareholders’ equity, which represents the ownership interest of shareholders in the company.

The formula for calculating Return on Equity is:

ROE = (Net Income / Shareholders’ Equity) x 100

ROE represents how effectively a company utilizes the capital invested by its shareholders to generate profits. A higher ROE indicates that a company is generating more income for each unit of shareholders’ equity, which is generally viewed as favorable.

ROE is commonly used by investors and analysts to assess a company’s financial performance and compare it with industry peers. However, it is important to note that ROE alone does not provide a complete picture of a company’s financial health, and it should be evaluated in conjunction with other financial indicators and industry benchmarks.

Why Appoint Valtech as Valuation Adviser?

Valtech’s team has provided valuation advice to over 200 listed companies in Hong Kong, China, Singapore, Taiwan, Australia, the United Kingdom, the United States and Germany.

Valtech Valuation is a professional valuation firm accredited with ISO-9001 in valuation advisory services. The financial market and valuation requirements are highly dynamic. We are determined to develop and maintain a quality management system to foster an environment which is sustainable and evolving continuously. Our founders stress on development of a system and an environment that our consultants are provided with necessary support and opportunities to thrive.

We are a team of professionals from multiple disciplines including audit, financial modelling, tax, internal control and surveying. Our management adheres professional excellence. Abundant resources are reserved to develop standardized policies and procedures for quality control. We have solid track record in valuation advisory for listed companies, private equity, fund managers and financial institutions. We work closely with big four and other international accounting firms, corporate financial advisors, fund managers and legal advisors.

Valtech Advantages:

Advanced Valuation Techniques: Valtech Valuation can develop and implement advanced valuation techniques that are specifically tailored to the needs of clients. These techniques can go beyond traditional valuation methods and incorporate factors such as market trends, industry benchmarks, and risk analysis to provide more accurate and insightful valuations.

Customized Valuation Models: Valtech Valuation can create customized valuation models that align with the unique investment strategies and asset classes. By understanding the specific requirements and objectives of these entities, Valtech Valuation can develop models that capture the nuances of their portfolios, resulting in more precise and relevant valuations.

Data-driven Insights: Valtech Valuation can leverage its access to comprehensive data sources and analytics tools to provide data-driven insights. By analyzing market data, economic indicators, and performance metrics, Valtech Valuation can offer valuable insights into the valuation of assets, identify emerging trends, and help inform investment decision-making.

Adherence to Compliance and Reporting Standards: Valtech Valuation can ensure that valuation practices adhere to regulatory compliance and reporting standards. By staying updated on relevant regulations, such as accounting standards and industry guidelines, Valtech Valuation can help clients meet their reporting obligations accurately and in a timely manner.