ROE (Return on Equity)

ROE (Return on Equity) measures how efficiently a company uses your money to generate profits. Specifically, it's the annual profit divided by shareholders' equity—basically, the cash investors have put into the business. You'll see ROE quoted everywhere when researching stocks because it tells you whether management is doing a good job turning your investment into earnings. A higher ROE generally means the company is more efficient, though what counts as "good" varies by industry. For example, if TechCorp has an ROE of 15%, it means for every dollar of shareholder money, the company earned 15 cents in profit that year. It's a useful shortcut to compare how well different companies use investor capital.