Return on equity (ROE) is a financial ratio that measures the profitability of a company in relation to its shareholders’ equity. It is calculated by dividing net income by shareholders’ equity. A high ROE indicates that a company is generating a lot of profit relative to its equity, while a low ROE indicates that a company is not generating as much profit relative to its equity.
There are a number of ways to boost ROE. One way is to increase net income. This can be done by increasing sales, reducing expenses, or both. Another way to boost ROE is to reduce shareholders’ equity. This can be done by repurchasing shares or by issuing new shares at a higher price.
