Return on equity (ROE) is the rate of return that a company ... More (ROE) is the rate of return that a company generates with the Money is a generally accepted medium of exchange to buy and... More shareholders have invested.
It is calculated with the following formula:
For common stocks, the Return on Common Equity (ROCE) formula is:
Note that a high ROE offers no immediate benefit to investors. Share prices are chiefly affected by, meaning you would pay twice as much (based on the ) for a 20% ROE company as you would for a 10% ROE company.
However, when the earnings are reinvested in the company at a high ROE rate, this delivers a high growth rate. An investor is someone who spends capital with the expecta... More benefits can also come in the shape of a What is a dividend? A dividend is a payment made by a comp... More on common shares or as a combination of dividends and reinvestment in the company.