ROE (return on equity) divides net profit by shareholder equity. A 20% ROE means each Rs 100 of shareholder funds generated Rs 20 of profit this year.
Read it with leverage in mind: heavy borrowing shrinks equity and flatters ROE. Pair it with ROCE and debt-to-equity before concluding a company is excellent.
Example
A bank earning 1.2% on assets (ROA) with 8x leverage posts roughly 15%+ ROE - normal for banking, alarming anywhere else. Context decides.
In Ticker Screener
ROE is one tap away on the switchable ratio column - compare it across banks, IT and FMCG names without opening new tabs.
Frequently asked questions
What is a good ROE?
Above 15% sustained over 5+ years is strong in most sectors; banks run higher on leverage, utilities lower on asset intensity. Trend beats level.
Related terms
ROCE
Return on capital employed: how efficiently a company turns invested money into profit. Above 15–20% signals quality.
P/E Ratio
Price-to-earnings: what you pay for each rupee or dollar of yearly profit. The starting lens for cheap vs expensive.
P/B Ratio
Price-to-book: market price versus net asset value per share. The classic yardstick for banks and asset-heavy firms.
P/E, ROCE, ROE, P/B, dividend yield and market cap — live beside every price in your watchlist.