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class="mw-page-title-main">Return on equity</span></h1> <div id="p-lang-btn" class="vector-dropdown mw-portlet mw-portlet-lang" > <input type="checkbox" id="p-lang-btn-checkbox" role="button" aria-haspopup="true" data-event-name="ui.dropdown-p-lang-btn" class="vector-dropdown-checkbox mw-interlanguage-selector" aria-label="Go to an article in another language. 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class="interlanguage-link-target"><span>العربية</span></a></li><li class="interlanguage-link interwiki-ca mw-list-item"><a href="https://ca.wikipedia.org/wiki/Rendibilitat_financera" title="Rendibilitat financera – Catalan" lang="ca" hreflang="ca" data-title="Rendibilitat financera" data-language-autonym="Català" data-language-local-name="Catalan" class="interlanguage-link-target"><span>Català</span></a></li><li class="interlanguage-link interwiki-cs mw-list-item"><a href="https://cs.wikipedia.org/wiki/Rentabilita_vlastn%C3%ADho_kapit%C3%A1lu" title="Rentabilita vlastního kapitálu – Czech" lang="cs" hreflang="cs" data-title="Rentabilita vlastního kapitálu" data-language-autonym="Čeština" data-language-local-name="Czech" class="interlanguage-link-target"><span>Čeština</span></a></li><li class="interlanguage-link interwiki-da mw-list-item"><a href="https://da.wikipedia.org/wiki/Egenkapitalafkast" title="Egenkapitalafkast – Danish" lang="da" hreflang="da" data-title="Egenkapitalafkast" data-language-autonym="Dansk" data-language-local-name="Danish" class="interlanguage-link-target"><span>Dansk</span></a></li><li class="interlanguage-link interwiki-de badge-Q70894304 mw-list-item" title=""><a href="https://de.wikipedia.org/wiki/Eigenkapitalrentabilit%C3%A4t" title="Eigenkapitalrentabilität – German" lang="de" hreflang="de" data-title="Eigenkapitalrentabilität" data-language-autonym="Deutsch" data-language-local-name="German" class="interlanguage-link-target"><span>Deutsch</span></a></li><li class="interlanguage-link interwiki-et mw-list-item"><a href="https://et.wikipedia.org/wiki/Omakapitali_tootlus" title="Omakapitali tootlus – Estonian" lang="et" hreflang="et" data-title="Omakapitali tootlus" data-language-autonym="Eesti" data-language-local-name="Estonian" class="interlanguage-link-target"><span>Eesti</span></a></li><li class="interlanguage-link interwiki-es mw-list-item"><a href="https://es.wikipedia.org/wiki/Rentabilidad_financiera" title="Rentabilidad financiera – Spanish" lang="es" hreflang="es" data-title="Rentabilidad financiera" data-language-autonym="Español" data-language-local-name="Spanish" class="interlanguage-link-target"><span>Español</span></a></li><li class="interlanguage-link interwiki-eu mw-list-item"><a href="https://eu.wikipedia.org/wiki/Finantza_errentagarritasun" title="Finantza errentagarritasun – Basque" lang="eu" hreflang="eu" data-title="Finantza errentagarritasun" data-language-autonym="Euskara" data-language-local-name="Basque" class="interlanguage-link-target"><span>Euskara</span></a></li><li class="interlanguage-link interwiki-fa mw-list-item"><a href="https://fa.wikipedia.org/wiki/%D8%A8%D8%A7%D8%B2%D8%AF%D9%87_%D8%AD%D9%82%D9%88%D9%82_%D8%B5%D8%A7%D8%AD%D8%A8%D8%A7%D9%86_%D8%B3%D9%87%D8%A7%D9%85" title="بازده حقوق صاحبان سهام – Persian" lang="fa" hreflang="fa" data-title="بازده حقوق صاحبان سهام" data-language-autonym="فارسی" data-language-local-name="Persian" class="interlanguage-link-target"><span>فارسی</span></a></li><li class="interlanguage-link interwiki-fr mw-list-item"><a href="https://fr.wikipedia.org/wiki/Rentabilit%C3%A9_des_capitaux_propres" title="Rentabilité des capitaux propres – French" lang="fr" hreflang="fr" data-title="Rentabilité des capitaux propres" data-language-autonym="Français" data-language-local-name="French" class="interlanguage-link-target"><span>Français</span></a></li><li class="interlanguage-link interwiki-ko mw-list-item"><a href="https://ko.wikipedia.org/wiki/%EC%9E%90%EA%B8%B0%EC%9E%90%EB%B3%B8%EC%9D%B4%EC%9D%B5%EB%A5%A0" title="자기자본이익률 – Korean" lang="ko" hreflang="ko" data-title="자기자본이익률" data-language-autonym="한국어" data-language-local-name="Korean" class="interlanguage-link-target"><span>한국어</span></a></li><li class="interlanguage-link interwiki-it mw-list-item"><a href="https://it.wikipedia.org/wiki/Return_on_equity" title="Return on equity – Italian" lang="it" hreflang="it" data-title="Return on equity" data-language-autonym="Italiano" data-language-local-name="Italian" class="interlanguage-link-target"><span>Italiano</span></a></li><li class="interlanguage-link interwiki-he mw-list-item"><a href="https://he.wikipedia.org/wiki/%D7%AA%D7%A9%D7%95%D7%90%D7%94_%D7%A2%D7%9C_%D7%94%D7%94%D7%95%D7%9F" title="תשואה על ההון – Hebrew" lang="he" hreflang="he" data-title="תשואה על ההון" data-language-autonym="עברית" data-language-local-name="Hebrew" class="interlanguage-link-target"><span>עברית</span></a></li><li class="interlanguage-link interwiki-lv mw-list-item"><a href="https://lv.wikipedia.org/wiki/Pa%C5%A1u_kapit%C4%81la_atdeve" title="Pašu kapitāla atdeve – Latvian" lang="lv" hreflang="lv" data-title="Pašu kapitāla atdeve" data-language-autonym="Latviešu" data-language-local-name="Latvian" class="interlanguage-link-target"><span>Latviešu</span></a></li><li class="interlanguage-link interwiki-lt mw-list-item"><a href="https://lt.wikipedia.org/wiki/Nuosavo_kapitalo_pelningumas" title="Nuosavo kapitalo pelningumas – Lithuanian" lang="lt" hreflang="lt" data-title="Nuosavo kapitalo pelningumas" data-language-autonym="Lietuvių" data-language-local-name="Lithuanian" class="interlanguage-link-target"><span>Lietuvių</span></a></li><li class="interlanguage-link interwiki-ms mw-list-item"><a href="https://ms.wikipedia.org/wiki/Pulangan_ekuiti" title="Pulangan ekuiti – Malay" lang="ms" hreflang="ms" data-title="Pulangan ekuiti" data-language-autonym="Bahasa Melayu" data-language-local-name="Malay" class="interlanguage-link-target"><span>Bahasa Melayu</span></a></li><li class="interlanguage-link interwiki-nl mw-list-item"><a href="https://nl.wikipedia.org/wiki/Rentabiliteit_eigen_vermogen" title="Rentabiliteit eigen vermogen – Dutch" lang="nl" hreflang="nl" data-title="Rentabiliteit eigen vermogen" data-language-autonym="Nederlands" data-language-local-name="Dutch" class="interlanguage-link-target"><span>Nederlands</span></a></li><li class="interlanguage-link interwiki-ja mw-list-item"><a href="https://ja.wikipedia.org/wiki/%E8%87%AA%E5%B7%B1%E8%B3%87%E6%9C%AC%E5%88%A9%E7%9B%8A%E7%8E%87" title="自己資本利益率 – Japanese" lang="ja" hreflang="ja" data-title="自己資本利益率" data-language-autonym="日本語" data-language-local-name="Japanese" class="interlanguage-link-target"><span>日本語</span></a></li><li class="interlanguage-link interwiki-no mw-list-item"><a href="https://no.wikipedia.org/wiki/Egenkapitalavkastning" title="Egenkapitalavkastning – Norwegian Bokmål" lang="nb" hreflang="nb" data-title="Egenkapitalavkastning" data-language-autonym="Norsk bokmål" data-language-local-name="Norwegian Bokmål" class="interlanguage-link-target"><span>Norsk bokmål</span></a></li><li class="interlanguage-link interwiki-pl mw-list-item"><a href="https://pl.wikipedia.org/wiki/Wska%C5%BAnik_rentowno%C5%9Bci_kapita%C5%82u_w%C5%82asnego" title="Wskaźnik rentowności kapitału własnego – Polish" lang="pl" hreflang="pl" data-title="Wskaźnik rentowności kapitału własnego" 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<div class="mw-indicators"> </div> <div id="siteSub" class="noprint">From Wikipedia, the free encyclopedia</div> </div> <div id="contentSub"><div id="mw-content-subtitle"></div></div> <div id="mw-content-text" class="mw-body-content"><div class="mw-content-ltr mw-parser-output" lang="en" dir="ltr"><div class="shortdescription nomobile noexcerpt noprint searchaux" style="display:none">Measure of the profitability of a business</div> <p>The <b>return on equity</b> (<b>ROE</b>) is a measure of the <a href="/wiki/Profitability" class="mw-redirect" title="Profitability">profitability</a> of a business in relation to its <a href="/wiki/Equity_(finance)" title="Equity (finance)">equity</a>;<sup id="cite_ref-Fernando_1-0" class="reference"><a href="#cite_note-Fernando-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup> where: </p> <dl><dd><span class="texhtml">ROE = <span style="font-size:120%"><style data-mw-deduplicate="TemplateStyles:r1214402035">.mw-parser-output .sfrac{white-space:nowrap}.mw-parser-output .sfrac.tion,.mw-parser-output .sfrac .tion{display:inline-block;vertical-align:-0.5em;font-size:85%;text-align:center}.mw-parser-output .sfrac .num{display:block;line-height:1em;margin:0.0em 0.1em;border-bottom:1px solid}.mw-parser-output .sfrac .den{display:block;line-height:1em;margin:0.1em 0.1em}.mw-parser-output .sr-only{border:0;clip:rect(0,0,0,0);clip-path:polygon(0px 0px,0px 0px,0px 0px);height:1px;margin:-1px;overflow:hidden;padding:0;position:absolute;width:1px}</style><span class="sfrac">⁠<span class="tion"><span class="num">Net Income</span><span class="sr-only">/</span><span class="den">Average Shareholders' Equity</span></span>⁠</span></span></span> <sup id="cite_ref-Fernando_1-1" class="reference"><a href="#cite_note-Fernando-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup></dd></dl> <p>Thus, ROE is equal to a <a href="/wiki/Fiscal_year" title="Fiscal year">fiscal year</a>'s <a href="/wiki/Net_income" title="Net income">net income</a> (after <a href="/wiki/Preferred_stock" title="Preferred stock">preferred stock</a> dividends, before <a href="/wiki/Common_stock" title="Common stock">common stock</a> dividends), divided by total equity (excluding preferred shares), expressed as a percentage. Because shareholder's equity can be calculated by taking all assets and subtracting all liabilities, ROE can also be thought of as a return on <a href="/wiki/Net_asset_value" title="Net asset value">NAV</a>, or <i>assets less liabilities</i>. </p> <meta property="mw:PageProp/toc" /> <div class="mw-heading mw-heading2"><h2 id="Usage">Usage</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Return_on_equity&action=edit&section=1" title="Edit section: Usage"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>ROE measures how many dollars of profit are generated for each dollar of <a href="/wiki/Shareholder%27s_equity" class="mw-redirect" title="Shareholder's equity">shareholder's equity</a>, and is thus a metric <a href="/wiki/Financial_ratio#Profitability_ratios" title="Financial ratio">of how well the company utilizes its equity</a> to generate profits. </p><p>ROE is especially used for comparing the performance of companies in the same industry. As with <a href="/wiki/Return_on_capital" title="Return on capital">return on capital</a>, an ROE is a measure of management's ability to generate income from the equity available to it. ROEs of 15–20% are generally considered good.<sup id="cite_ref-pedia_2-0" class="reference"><a href="#cite_note-pedia-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup> </p><p>ROE is also a factor in <a href="/wiki/Stock_valuation" title="Stock valuation">stock valuation</a>, in association with other <a href="/wiki/Financial_ratio" title="Financial ratio">financial ratios</a>. Note though that, while higher ROE ought intuitively to imply higher stock prices, in reality, predicting the stock value of a company based on its ROE is dependent on too many other factors to be of use by itself.<sup id="cite_ref-3" class="reference"><a href="#cite_note-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup> </p><p>Both of these are expanded below. </p> <div class="mw-heading mw-heading2"><h2 id="The_DuPont_formula">The DuPont formula</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Return_on_equity&action=edit&section=2" title="Edit section: The DuPont formula"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1236090951">.mw-parser-output .hatnote{font-style:italic}.mw-parser-output div.hatnote{padding-left:1.6em;margin-bottom:0.5em}.mw-parser-output .hatnote i{font-style:normal}.mw-parser-output .hatnote+link+.hatnote{margin-top:-0.5em}@media print{body.ns-0 .mw-parser-output .hatnote{display:none!important}}</style><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/DuPont_analysis" title="DuPont analysis">DuPont analysis</a></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="/wiki/DuPont_analysis#ROE_analysis" title="DuPont analysis">DuPont analysis § ROE analysis</a>, and <a href="/wiki/Financial_risk_management#Corporate_finance" title="Financial risk management">Financial risk management § Corporate finance</a></div> <p>The <a href="/wiki/Du_Pont_identity" class="mw-redirect" title="Du Pont identity">DuPont formula</a>, <sup id="cite_ref-Hargrave_4-0" class="reference"><a href="#cite_note-Hargrave-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup> also known as the strategic profit model, is a framework allowing management to decompose ROE into three <i>actionable</i> components; these "drivers of value" being the <a href="/wiki/Economic_efficiency" title="Economic efficiency">efficiency</a> of operations, asset usage, and finance. ROE is then the <a href="/wiki/Net_profit_margin" class="mw-redirect" title="Net profit margin">net profit margin</a> multiplied by <a href="/wiki/Asset_turnover" title="Asset turnover">asset turnover</a> multiplied by <a href="/wiki/Leverage_(finance)#Investments" title="Leverage (finance)">accounting leverage</a>: </p> <dl><dd><span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle \mathrm {ROE} ={\frac {\mbox{Net income}}{\mbox{Sales}}}\times {\frac {\mbox{Sales}}{\mbox{Total Assets}}}\times {\frac {\mbox{Total Assets}}{\mbox{Shareholder Equity}}}}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mrow class="MJX-TeXAtom-ORD"> <mi mathvariant="normal">R</mi> <mi mathvariant="normal">O</mi> <mi mathvariant="normal">E</mi> </mrow> <mo>=</mo> <mrow class="MJX-TeXAtom-ORD"> <mfrac> <mstyle displaystyle="false" scriptlevel="0"> <mtext>Net income</mtext> </mstyle> <mstyle displaystyle="false" scriptlevel="0"> <mtext>Sales</mtext> </mstyle> </mfrac> </mrow> <mo>×</mo> <mrow class="MJX-TeXAtom-ORD"> <mfrac> <mstyle displaystyle="false" scriptlevel="0"> <mtext>Sales</mtext> </mstyle> <mstyle displaystyle="false" scriptlevel="0"> <mtext>Total Assets</mtext> </mstyle> </mfrac> </mrow> <mo>×</mo> <mrow class="MJX-TeXAtom-ORD"> <mfrac> <mstyle displaystyle="false" scriptlevel="0"> <mtext>Total Assets</mtext> </mstyle> <mstyle displaystyle="false" scriptlevel="0"> <mtext>Shareholder Equity</mtext> </mstyle> </mfrac> </mrow> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle \mathrm {ROE} ={\frac {\mbox{Net income}}{\mbox{Sales}}}\times {\frac {\mbox{Sales}}{\mbox{Total Assets}}}\times {\frac {\mbox{Total Assets}}{\mbox{Shareholder Equity}}}}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/4b07c23de609fa934390126a58cfcd30b79e579f" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -2.338ex; width:59.809ex; height:5.843ex;" alt="{\displaystyle \mathrm {ROE} ={\frac {\mbox{Net income}}{\mbox{Sales}}}\times {\frac {\mbox{Sales}}{\mbox{Total Assets}}}\times {\frac {\mbox{Total Assets}}{\mbox{Shareholder Equity}}}}"></span></dd></dl> <p>The application, in the main, is either to <a href="/wiki/Financial_management" title="Financial management">financial management</a> or to <a href="/wiki/Fund_management" class="mw-redirect" title="Fund management">fund management</a>: </p> <ul><li>Splitting return on equity into the three components, makes it easier for <a href="/wiki/Financial_manager" class="mw-redirect" title="Financial manager">financial managers</a> to understand changes in ROE over time. For example, if the net margin increases, every sale brings in more money, resulting in a higher overall ROE. Similarly, if the asset turnover increases, the firm generates more sales for every unit of assets owned, again resulting in a higher overall ROE. Finally, increasing accounting leverage means that the firm uses more <a href="/wiki/Debt" title="Debt">debt</a> financing relative to <a href="/wiki/Equity_(finance)" title="Equity (finance)">equity</a> financing. Interest payments to <a href="/wiki/Creditor" title="Creditor">creditors</a> are <a href="/wiki/Tax_deduction" title="Tax deduction">tax-deductible</a>, but dividend payments to shareholders are not. Thus, a higher proportion of debt in the firm's capital structure leads to higher ROE.<sup id="cite_ref-pedia_2-1" class="reference"><a href="#cite_note-pedia-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup> Financial leverage benefits diminish as the risk of defaulting on interest payments increases. If the firm takes on too much debt, the <a href="/wiki/Cost_of_debt" class="mw-redirect" title="Cost of debt">cost of debt</a> rises as creditors demand a higher risk premium, and ROE decreases.<sup id="cite_ref-5" class="reference"><a href="#cite_note-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup> Increased debt will make a positive contribution to a firm's ROE only if the matching <a href="/wiki/Return_on_assets" title="Return on assets">return on assets</a> (ROA) of that debt exceeds the interest rate on the debt.<sup id="cite_ref-6" class="reference"><a href="#cite_note-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup></li></ul> <ul><li>Identifying the sources of ROE in this fashion similarly allows <a href="/wiki/Investment_analyst" class="mw-redirect" title="Investment analyst">investment analysts</a> a better knowledge of the company and how it should be <a href="/wiki/Valuation_(finance)" title="Valuation (finance)">valued</a>.<sup id="cite_ref-Fernando_1-2" class="reference"><a href="#cite_note-Fernando-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup> Here, analysts will compare the current sources of ROE against the company's history and its competitors, and thereby better <a href="/wiki/Valuation_using_discounted_cash_flows#Determine_equity_value" title="Valuation using discounted cash flows">understand the drivers</a> of value. In particular, as mentioned, ROE is used developing <a href="/wiki/Sustainable_growth_rate#From_a_financial_perspective" title="Sustainable growth rate">estimates of a stock’s growth rate</a>, and hence the growth rate of its <a href="/wiki/Dividends" class="mw-redirect" title="Dividends">dividends</a>. These then feed, respectively, into the <a href="/wiki/Terminal_value_(finance)" title="Terminal value (finance)">terminal value</a> calculation, and / or the <a href="/wiki/Dividend_discount_model" title="Dividend discount model">dividend discount model</a> valuation result. Relatedly, this analysis allows management to preempt any underperformance vs <a href="/wiki/Capital_asset_pricing_model#Asset-specific_required_return" title="Capital asset pricing model">shareholders' required return</a>,<sup id="cite_ref-7" class="reference"><a href="#cite_note-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup> which could then lead to a decline in <a href="/wiki/Share_price" title="Share price">share price</a>, as, "in order to satisfy investors, a company should be able to generate a higher ROE than the return available from a lower risk investment".<sup id="cite_ref-8" class="reference"><a href="#cite_note-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup></li></ul> <div class="mw-heading mw-heading2"><h2 id="See_also">See also</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Return_on_equity&action=edit&section=3" title="Edit section: See also"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li><a href="/wiki/DuPont_analysis" title="DuPont analysis">DuPont analysis</a></li> <li><a href="/wiki/List_of_business_and_finance_abbreviations" title="List of business and finance abbreviations">List of business and finance abbreviations</a></li> <li><a href="/wiki/Return_on_assets" title="Return on assets">Return on assets</a> (RoA)</li> <li><a href="/wiki/Return_on_brand" title="Return on brand">Return on brand</a> (ROB)</li> <li><a href="/wiki/Return_on_capital_employed" title="Return on capital employed">Return on capital employed</a> (ROCE)</li> <li><a href="/wiki/Return_on_capital" title="Return on capital">Return on capital</a> (RoC)</li> <li><a href="/wiki/Return_on_net_assets" title="Return on net assets">Return on net assets</a> (RoNA)</li> <li><a href="/wiki/Leverage_effect" class="mw-redirect" title="Leverage effect">Leverage effect</a></li></ul> <div class="mw-heading mw-heading2"><h2 id="Notes">Notes</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Return_on_equity&action=edit&section=4" title="Edit section: Notes"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1239543626">.mw-parser-output .reflist{margin-bottom:0.5em;list-style-type:decimal}@media screen{.mw-parser-output .reflist{font-size:90%}}.mw-parser-output .reflist .references{font-size:100%;margin-bottom:0;list-style-type:inherit}.mw-parser-output .reflist-columns-2{column-width:30em}.mw-parser-output .reflist-columns-3{column-width:25em}.mw-parser-output .reflist-columns{margin-top:0.3em}.mw-parser-output .reflist-columns ol{margin-top:0}.mw-parser-output .reflist-columns li{page-break-inside:avoid;break-inside:avoid-column}.mw-parser-output .reflist-upper-alpha{list-style-type:upper-alpha}.mw-parser-output .reflist-upper-roman{list-style-type:upper-roman}.mw-parser-output .reflist-lower-alpha{list-style-type:lower-alpha}.mw-parser-output .reflist-lower-greek{list-style-type:lower-greek}.mw-parser-output .reflist-lower-roman{list-style-type:lower-roman}</style><div class="reflist"> <div class="mw-references-wrap"><ol class="references"> <li id="cite_note-Fernando-1"><span class="mw-cite-backlink">^ <a href="#cite_ref-Fernando_1-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-Fernando_1-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-Fernando_1-2"><sup><i><b>c</b></i></sup></a></span> <span class="reference-text">Jason Fernando (2023). <a rel="nofollow" class="external text" href="http://www.investopedia.com/terms/r/returnonequity.asp">"Return on Equity (ROE) Calculation and What It Means"</a>, <a href="/wiki/Investopedia" title="Investopedia">Investopedia</a></span> </li> <li id="cite_note-pedia-2"><span class="mw-cite-backlink">^ <a href="#cite_ref-pedia_2-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-pedia_2-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text">Richard Loth <a rel="nofollow" class="external text" href="http://www.investopedia.com/university/ratios/profitability-indicator/ratio4.asp">Profitability Indicator Ratios: Return On Equity</a>", <a href="/wiki/Investopedia" title="Investopedia">Investopedia</a></span> </li> <li id="cite_note-3"><span class="mw-cite-backlink"><b><a href="#cite_ref-3">^</a></b></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">.mw-parser-output cite.citation{font-style:inherit;word-wrap:break-word}.mw-parser-output .citation q{quotes:"\"""\"""'""'"}.mw-parser-output .citation:target{background-color:rgba(0,127,255,0.133)}.mw-parser-output .id-lock-free.id-lock-free a{background:url("//upload.wikimedia.org/wikipedia/commons/6/65/Lock-green.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-limited.id-lock-limited a,.mw-parser-output .id-lock-registration.id-lock-registration a{background:url("//upload.wikimedia.org/wikipedia/commons/d/d6/Lock-gray-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-subscription.id-lock-subscription a{background:url("//upload.wikimedia.org/wikipedia/commons/a/aa/Lock-red-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .cs1-ws-icon a{background:url("//upload.wikimedia.org/wikipedia/commons/4/4c/Wikisource-logo.svg")right 0.1em center/12px no-repeat}body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-free a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-limited a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-registration a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-subscription a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .cs1-ws-icon a{background-size:contain;padding:0 1em 0 0}.mw-parser-output .cs1-code{color:inherit;background:inherit;border:none;padding:inherit}.mw-parser-output .cs1-hidden-error{display:none;color:var(--color-error,#d33)}.mw-parser-output .cs1-visible-error{color:var(--color-error,#d33)}.mw-parser-output .cs1-maint{display:none;color:#085;margin-left:0.3em}.mw-parser-output .cs1-kern-left{padding-left:0.2em}.mw-parser-output .cs1-kern-right{padding-right:0.2em}.mw-parser-output .citation .mw-selflink{font-weight:inherit}@media screen{.mw-parser-output .cs1-format{font-size:95%}html.skin-theme-clientpref-night .mw-parser-output .cs1-maint{color:#18911f}}@media screen and (prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .cs1-maint{color:#18911f}}</style><cite id="CITEREFRotblutInvesting2013" class="citation news cs1">Rotblut, Charles; Investing, Intelligent (January 18, 2013). <a rel="nofollow" class="external text" href="https://www.forbes.com/sites/investor/2013/01/18/beware-weak-link-between-return-on-equity-and-high-stock-price-returns/#b208ea569548">"Beware: Weak Link Between Return On Equity And High Stock Price Returns"</a>. <i>Forbes</i><span class="reference-accessdate">. Retrieved <span class="nowrap">November 4,</span> 2018</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Forbes&rft.atitle=Beware%3A+Weak+Link+Between+Return+On+Equity+And+High+Stock+Price+Returns&rft.date=2013-01-18&rft.aulast=Rotblut&rft.aufirst=Charles&rft.au=Investing%2C+Intelligent&rft_id=https%3A%2F%2Fwww.forbes.com%2Fsites%2Finvestor%2F2013%2F01%2F18%2Fbeware-weak-link-between-return-on-equity-and-high-stock-price-returns%2F%23b208ea569548&rfr_id=info%3Asid%2Fen.wikipedia.org%3AReturn+on+equity" class="Z3988"></span></span> </li> <li id="cite_note-Hargrave-4"><span class="mw-cite-backlink"><b><a href="#cite_ref-Hargrave_4-0">^</a></b></span> <span class="reference-text">Marshall Hargrave (2022). <a rel="nofollow" class="external text" href="https://www.investopedia.com/terms/d/dupontanalysis.asp">Dupont Analysis</a>, <a href="/wiki/Investopedia" title="Investopedia">Investopedia</a>.</span> </li> <li id="cite_note-5"><span class="mw-cite-backlink"><b><a href="#cite_ref-5">^</a></b></span> <span class="reference-text">Woolridge, J. Randall and Gray, Gary; Applied Principles of Finance (2006)</span> </li> <li id="cite_note-6"><span class="mw-cite-backlink"><b><a href="#cite_ref-6">^</a></b></span> <span class="reference-text">Bodie, Kane, Markus, "Investments"</span> </li> <li id="cite_note-7"><span class="mw-cite-backlink"><b><a href="#cite_ref-7">^</a></b></span> <span class="reference-text">See discussion under § <a rel="nofollow" class="external text" href="https://www.oreilly.com/library/view/financial-accounting-in/9780470635292/ch05sec12.html">Shareholder Value, ROE, and Cash Flow Analyses</a> in: Jamie Pratt and Michael Peters (2016). <i>Financial Accounting in an Economic Context</i> (10th Edition). Wiley Finance. <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-1-119-30616-0" title="Special:BookSources/978-1-119-30616-0">978-1-119-30616-0</a></span> </li> <li id="cite_note-8"><span class="mw-cite-backlink"><b><a href="#cite_ref-8">^</a></b></span> <span class="reference-text">Staff (2023). <a rel="nofollow" class="external text" href="https://corporatefinanceinstitute.com/resources/accounting/what-is-return-on-equity-roe/">Return on Equity</a>. <a href="/wiki/Corporate_Finance_Institute" title="Corporate Finance Institute">Corporate Finance Institute</a></span> </li> </ol></div></div> <p><br /> </p> <div class="navbox-styles"><style data-mw-deduplicate="TemplateStyles:r1129693374">.mw-parser-output .hlist dl,.mw-parser-output .hlist ol,.mw-parser-output .hlist ul{margin:0;padding:0}.mw-parser-output .hlist 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