Return on equity: Difference between revisions
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imported>Doug Williamson m (Link with Return on shareholders funds page.) |
imported>Doug Williamson (Add market value definition.) |
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1. ''Financial reporting and management accounting.'' | |||
(ROE). | (ROE). | ||
A measure of how much profit is enjoyed (or expected to be enjoyed) by equity investors, compared to the book value of the equity investment made. | A measure of how much profit is enjoyed (or expected to be enjoyed) by equity investors, compared to the '''book value''' of the equity investment made. | ||
Profit is measured as profit after tax. | Profit is measured as profit after tax. | ||
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Profit after tax / (book value of equity) | Profit after tax / (book value of equity) | ||
2. ''Corporate finance.'' | |||
(Re). | |||
A measure of how much return is enjoyed (or expected to be enjoyed) by equity investors, compared to the '''market value''' of their shares. | |||
The return includes dividends received and receivable, together with any gain or loss on the market value of the shares. | |||
== See also == | == See also == | ||
* [[Book value]] | * [[Book value]] | ||
* [[Cost of equity]] | |||
* [[Equity]] | * [[Equity]] | ||
* [[Profit after tax]] | * [[Profit after tax]] | ||
Revision as of 13:10, 19 July 2019
1. Financial reporting and management accounting.
(ROE).
A measure of how much profit is enjoyed (or expected to be enjoyed) by equity investors, compared to the book value of the equity investment made.
Profit is measured as profit after tax.
ROE is calculated as:
Profit after tax / (book value of equity)
2. Corporate finance.
(Re).
A measure of how much return is enjoyed (or expected to be enjoyed) by equity investors, compared to the market value of their shares.
The return includes dividends received and receivable, together with any gain or loss on the market value of the shares.
