Overview
ROE measures net income generated for each unit of shareholder equity.
Formula
ROE = Net Income / Average Equity
How to Interpret
High Value
A high ROE can signal strong profitability, but leverage should be checked.
Low Value
A low ROE may suggest weak profitability or inefficient equity use.
Where It Is Used
Interpreting Return on Equity (ROE) with company-specific distribution ranges is usually more stable than relying only on sector average.