What is Return on Equity (ROE)?

Question

Accepted Answer

The fundamental formula for calculating Return on Equity (ROE) is **Net Income divided by Shareholder Equity**. More formally, it is often expressed as:

Return on Equity (ROE)

What is Return on Equity (ROE)?

How does the DuPont Analysis decompose ROE, and why is this breakdown critical for evaluating financial health?

How is Return on Equity (ROE) interpreted differently for fintech and embedded finance companies?

What are the key limitations and potential distortions investors must consider when analyzing a company's ROE?

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