Return on Equity (ROE)
Definition
A profitability ratio measuring how effectively a company uses shareholders’ equity to generate profits. Higher ROE generally indicates better management efficiency.
Formula / Rules
$ \text{ROE} = \frac{\text{Net Income}}{\text{Shareholders' Equity}} $
Example
A company with $10 million net income and $50 million equity has 20% ROE. Return on Assets (ROA) Category: Equity / Performance Metric Definition: A profitability ratio showing how efficiently a company uses its assets to generate earnings. Formul
Frequently Asked Question
What is Return on Equity (ROE) in trading?
A profitability ratio measuring how effectively a company uses shareholders’ equity to generate profits. Higher ROE generally indicates better management efficiency.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.