Profitability ratios show the combined effects of liquidity, asset management, and debt management on operating results. These are a set of measurements used to determine the ability of a business to create earnings.

Return on Equity (ROE)
o The return on equity divides net profits by the total amount of equity on the balance sheet.
o A favorably high ROE ratio is often cited as a reason to purchase a company’s stock. Companies with a high return on equity are usually more capable of generating cash internally, and therefore less dependent on debt financing.
• ROE = Net income/Total equity

свернуть