Returns

ROE — Return on Equity

Net income divided by total equity.

Definition

ROE measures the return generated for equity holders on the equity capital they've contributed and the company has retained.

Formula

(Net Income ÷ Total Equity) × 100

Why it matters

ROE is widely quoted but easy to manipulate via leverage — a company can lift ROE simply by funding itself with more debt. Always read ROE alongside debt-to-equity. Sustained 15%+ ROE without excessive leverage is a quality signal.

How Standard Equity uses it

Shown in the main financial table and projected for current and next fiscal year using the clean-surplus relationship. For banks, insurers and broker-dealers the SE Grade's moat pillar also holds the moat back when the recent average ROE ranks low among comparable companies.

The metric

CategoryReturns
Unit%
← Back to glossary