Eigenkapitalrentabilität

Eigenkapitalrentabilität, often translated as Return on Equity (ROE), is a key financial ratio that measures a company's profitability in relation to its shareholders' equity. It essentially shows how effectively a company is using the money invested by its owners to generate profits. The formula for calculating Eigenkapitalrentabilität is Net Income divided by Shareholders' Equity. Shareholders' equity represents the total value of a company's assets minus its liabilities, effectively the residual interest in the assets of the entity after deducting all its liabilities. A higher Eigenkapitalrentabilität generally indicates that a company is more efficient at converting equity financing into profits. Investors often use this metric to compare the performance of different companies within the same industry or to assess a company's ability to generate returns for its shareholders over time. It is an important indicator for evaluating the financial health and management effectiveness of a business. However, it's crucial to consider ROE in conjunction with other financial ratios and the specific industry context, as what constitutes a "good" ROE can vary significantly.