ROE (Return on Equity)
How much profit a company generates from shareholders' equity.
What it means
ROE measures how efficiently a company turns shareholder money into profit. It is a favorite of quality-focused investors like Warren Buffett, because a consistently high ROE signals a strong, well-run business.
Formula
ROE = Net Income ÷ Shareholders' Equity
Example
A company earning $200 million on $1 billion of equity has a 20% ROE.
What is a good ROE?
An ROE of 15 to 20% or more, sustained over years, is generally strong. But watch for high ROE driven by heavy debt, which inflates the ratio while adding risk.
See it on real stocks
Every stock analysis page shows ROE alongside the other key metrics: