What is ROE?Return on Equity
Return on equity: net income ÷ shareholders' equity, or how much each $1 shareholders put in earns in a year.
Learn “ROE” in an animated lesson
- Fundamental AnalysisPrice-to-Book and Dividend Yield
P/B shows how much you pay for each $1 of net assets; dividend yield shows how much cash you get back each year. Read both alongside ROE and the payout ratio so you don't fall into a "cheap" trap.
- Fundamental AnalysisROE and DuPont Analysis
Three companies can all have a 15% ROE: one through high margins, one by selling fast, one by borrowing. DuPont analysis splits ROE into three parts to show how a company makes money and the risks behind it.
Related terms
See how “ROE” works for yourself with an animation you can drag and play.
Go to “Price-to-Book and Dividend Yield”