Glossary · from the DESK dictionary
Return on Equity (ROE)
A profitability metric dividing a company's net income by its shareholders' equity, to assess how efficiently a company uses shareholder capital.
In plain words
One of the most commonly used metrics for assessing profitability from the shareholder perspective.
What it means for traders
A fundamental practical metric, central to practically every fundamental equity analysis.
Common pitfalls
Can be artificially inflated through high leverage, which obscures the actual operating risk.
Related terms
DuPont Identity · Levermann Strategy · Return on Assets (ROA) · Return on Capital Employed (ROCE) · Return on Invested Capital (ROIC) · Shareholder Equity
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.