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Trading glossary

What is ROE?

Fundamental AnalysisIntermediate

Return on Equity (ROE) measures how efficiently a company uses shareholders' equity to generate profit. An ROE of 20% means the company generates 20p of profit for every £1 of equity. High ROE is generally good, but very high ROE combined with high debt warrants caution.

Related terms: ROA Equity Profit Margin

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