Return on Equity (ROE)

Return on equity indicates the amount of profit earned by a public company in relation to the equity held by its shareholders.

This indicator provides the company and its shareholders with an overview of the company’s effectiveness in turning investment into profit.

Return on equity is found by dividing a company’s net income by the total equity held by its shareholders.

Example:

A company’s net income over a one-year period totals 6 million Swiss francs. The total amount of equity held by its shareholders is worth 20 million Swiss francs. So the return on equity of that company is 30%.

More on this topic:
Fundamental analysis explained
Swiss stock broker comparison

About moneyland.ch

moneyland.ch is Switzerland’s independent online comparison service covering banking, insurance and telecom. More than 80 unbiased comparison tools and calculators are available on moneyland.ch, along with useful financial guides and timely news. The comprehensive comparison tools help you to find the right insurance policies, bank accounts, credit and prepaid cards, loans, mortgages, trading accounts and telecom products for your needs.