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.