Topics
Series
Concept
Name
Return on equity
en-NZ
Label
Return on equity
en-NZ
Description
Total current year taxable profit divided by total proprietor or shareholder funds.
The return on equity represents the rate of return earned on the owner’s equity and investment. It measures the business’s efficiency at turning equity (assets less liabilities) into profit. The higher the ratio, the more efficient a business is. The lower the ratio, and a negative ratio (loss), the less efficiently a business has used the owner’s investment.
en-NZ