Glossary

Return on Equity (ROE) is a financial metric that measures a company's profitability in relation to its shareholders' equity.

It's calculated by dividing a company's net income by its shareholders' equity. A higher ROE indicates that a company is effectively generating profit with the money invested by its shareholders. 💰

For example, if a company has a net income of $50,000 and its shareholders' equity is $200,000, the ROE would be 25% ($50,000 / $200,000).

Fun fact: Warren Buffett, one of the world's most successful investors, has mentioned that he likes to see companies with a consistent ROE of 15% or more over time as a sign of good performance. 🧐