What is Return on Equity?

Important banking qna for banking aspirants, which is helpful in banking exam.

Created On: Feb 12, 2015 17:31 IST

Return on Equity is measure of business profitability, which is equal to net after-tax income divided by the average level of shareholders’ equity in the business.

Also, it is considered as amount of net income returned as percentage of shareholder’s equity.

It measures profitability of corporation by revealing how much profit a company generates with the money invested by the shareholders.

ROE: Net Income/Shareholder’s equity

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