ROE- Return on Equity

Important Ratio

ROE- Return on Equity

Return on equity= Net income earned/ Total Equity

Now suppose equity( owners fund or invested capital by owners)of a company is 1 crore and the company has following net income figures

Q1- 5 lakhs
Q2- 7 Lakhs
Q3- 4 Lakhs
Q4- 9 Lakhs

Now total net income of the company is 25 lakhs....

So ROE is 25 lakhs/1 crore
Which is 25%

So basically ROE is nothing but the returns a company is earning on its invested capital....

Written by - #Yash

Edited by  - #Raj

                    #ow