ROE (Return on Equity)

ROE (Return on Equity) measures how efficiently a company turns shareholder money into profits. It's calculated by dividing net income (what the company earned after expenses) by shareholders' equity (the owners' stake in the company), then expressing it as a percentage. You'll see ROE when comparing companies in the same industry—it tells you which ones squeeze more profit from each dollar invested by owners. A higher ROE generally suggests better management and stronger business fundamentals. For example, if Company A generates a 15% ROE while Company B manages only 8%, Company A is doing more with its shareholders' money. That said, extremely high ROE can sometimes signal risk, so it's worth checking alongside other metrics.