10 stock analysis ratios used by the pros
Return on Equity
This is a key measure of efficiency. In crude terms, it is a measure of how well the board of a company is putting your money to work.
A higher ROE indicates that the business is generating a higher proportion of profit for the resources they have at their disposal.
It is extremely useful when comparing companies in the same industry but not so much inter-sector due to the difference in capital requirements.
Formula:
Return on Equity = Net Income/Shareholder Equity
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