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Return on equity (business statistics)
Definition
Return on equity or ROE measures the capacity of the capital invested by shareholders and partners (equity) to achieve a certain level of profit.
Return on equity is equal to the ratio of the net self-financing capacity (self-financing capacity - expenditure to maintain production potential intended for replacing production plant and covering operating risks) to equity (share capital + issue, merger and share premiums, etc. + revaluation adjustments + mandatory reserve + statutory or contractual reserves + regulated reserves + other reserves + report à nouveau + result of the period + investment subsidies + regulated provisions).
Return on equity is a ratio intended only for shareholders, while return on assets concerns the performances of the company.
