ROE

Is a term that stands for "Return on equity". It is a number that is used during fundamental analysis. ROE is thus how much return a company manages to get with the equity invested in the company.

ROE = earnings after tax or net income / the company's equity

Let's take an example of a company that has these numbers:

- profit equal to 1,000,000$
- equity equal to 2,000,000$

ROE for the company is then 50%.

ROE is used as a measure of how good the operation of the company is for those who own the company (the shareholders).