Return on equity ( ROE ) is a measure of the profitability of a business in relation to its equity. Learn how to calculate ROE , its usage, and its components with the DuPont formula. Learn how to calculate and interpret ROE , a measure of a company's annual return on its shareholders' equity. Find out the factors that affect ROE , such as leverage, profit margin, and asset turnover, and how to compare it with industry averages. The difference between return on equity ( ROE ) and return on capital employed (ROCE) is that ROE measures net income divided by shareholders’ equity and ROCE measures EBIT (earnings before interest and taxes) divided by total assets minus current liabilities. Return on Equity ( ROE ) evaluates a company’s profit relative to equity. Understand the meaning, formula, limitations and its financial impact.
