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The return on equity (ROE) is a measure of the profitability of a business in relation to its equity; [1] where: . ROE = Net Income / Average Shareholders' Equity [1] Thus, ROE is equal to a fiscal year's net income (after preferred stock dividends, before common stock dividends), divided by total equity (excluding preferred shares), expressed as a percentage.
The equity ratio measures the proportion of the total assets that are financed by stockholders, as opposed to creditors. A low equity ratio will produce good results for stockholders as long as the company earns a rate of return on assets that is greater than the interest rate paid to creditors. [1]
Return on equity (ROE) and return on assets (ROA) determine how efficient a company can be at generating profits. Both formulas that can help investors determine how good a company is at turning a ...
The return on equity (ROE) ratio is a measure of the rate of return to stockholders. [4] Decomposing the ROE into various factors influencing company performance is often called the DuPont system . [ 5 ]
Its current ratio of 1.4 suggests that it has ample liquidity. Last year the company produced $3.2 billion of free cash flow, well above the $1.3 billion distributed to shareholders as dividends.
An Overview of the Return on Assets Ratio Formula Return on assets is a measure of corporate efficiency. The more a company can earn relative to its total assets, the more productive it is.
Note that Shareholders' Equity and Owner's Equity are not the same thing, Shareholder's Equity represents the total number of shares in the company multiplied by each share's book value; Owner's Equity represents the total number of shares that an individual shareholder owns (usually the owner with controlling interest), multiplied by each ...
Shareholders' equity was flat at around $295 billion. And within all of that, we returned $5.5 billion of capital back to shareholders with $2 billion in common dividends paid and the repurchase ...