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Return on equity (ROE)
Strategic perspective
Financial perspective
Key performance question this indicator helps to answer
How efficiently are we using the investments that shareholders have made to generate profits?
Why is this indicator important?
Following on from the previous KPIs, return on equity (ROE) is another common measure of company profitability. ROE measures how much profit a company is generating from the money shareholders have invested.
Many analysts consider ROE the single most important financial ratio for investors and the best measure of management team performance.
Companies with a high ROE (especially if they have little or no debt – see also ROA or the debt to equity ratio) are able to grow without large capital ...
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