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Return on equity

Return on equity

Description

ROE is a ratio that indicates how well a company operates its’ assets. It also reveals how much income a company gets in comparison with the shareholder’s equity. Data to calculate this ratio is collected from the income statement and balance sheets.

Norms and limitations

It is considered that a ROE of at least 10% per year is not bad, 15% - good.

ROE value norms can differ depending on the industry the company is operating in. Also it depends on the general economic situation of the specific country. During the economic crisis, ROE value of 5% can be consider as a good result.

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