RETURN ON EQUITY (ROE)

Indicator of profitability . Determined by dividing net income for the past 12 months by common stockholder equity (adjusted for stock splits). Result is shown as a percentage. Investors use R.O.E. as a measure of how a company is using its money. R.O.E. may be decomposed into return on assets (R.O.A.) multiplied by financial leverage (total assets/total equity).