Calculate Return on Equity (ROE) to measure how effectively a company uses shareholders' equity to generate profit. A higher ROE indicates more efficient management and is a key metric for evaluating investment attractiveness.
Annual net income
Average of beginning and ending equity for the period
Divides net income by average shareholders' equity and multiplies by 100 to express as a percentage. An ROE above 15% is generally considered strong.
Compute your DTI ratio to assess loan eligibility and financial health.
Measure financial leverage using the debt-to-equity ratio.
Evaluate short-term liquidity with the current ratio.
Measure immediate liquidity using the quick (acid-test) ratio.
Evaluate stock valuation using the Price-to-Earnings ratio.
Assess asset efficiency with the Return on Assets ratio.
