Registered Office
5A, 5th Floor, Kences Towers, 1, Ramakrishna Street,
T. Nagar, Chennai - 600 017.
Email Address
Hi, I am Chanakya
Return on Equity (ROE): A Comprehensive Guide for Indian Investors
What is ROE?
Return on Equity (ROE) is a financial ratio that measures how efficiently a company uses its shareholders' equity to generate profit.
Here’s the basic formula:
ROE = ( Net Profit / Shareholders' Equity ) × 100
Why Is ROE Important?
ROE Helps Investors Understand:
-
Indicates how much profit a company makes for every ₹1 of shareholders’ money.
-
A higher ROE suggests better efficiency and profitability.
-
It is often used to compare companies within the same industry.
An Example
If a company has a net profit of ₹100 crore and shareholders' equity of ₹500 crore:
ROE = (100 / 500) × 100 = 20%
This means the company earns ₹0.20 for every ₹1 of equity invested.
Other Similar Metrics
- ROCE (Return on Capital Employed)
- ROA (Return on Assets)
- Return on Invested Capital (ROIC)
Disclaimer: Investments in capital markets are inherently
exposed to market risks. For a comprehensive disclaimer, please refer to our
website at
www.integratedindia.in/Disclaimer.html
Integrated Investment Update, May 16–31, 2025
Integrated Investment Update, May 16–31, 2025