ECONOMICS

Detailed explanation-1: -Return on equity (ROE) is the measure of a company’s net income divided by its shareholders’ equity. ROE is a gauge of a corporation’s profitability and how efficiently it generates those profits. The higher the ROE, the better a company is at converting its equity financing into profits.

Detailed explanation-2: -Return on Equity (ROE) Ratio. The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to generate profits from its shareholders investments in the company. In other words, the return on equity ratio shows how much profit each dollar of common stockholders’ equity generates.

Detailed explanation-3: -It’s a basic test of how effectively a company’s management uses investors’ money. ROE shows whether management is growing the company’s value at an acceptable rate. You can find net income on the income statement, and shareholders’ equity appears at the bottom of the company’s balance sheet.

Detailed explanation-4: -1. Financial Perspective: The balanced scorecard uses financial performance measures, such as net income and return on investment, because all for-profit organisations use them. Financial performance measures provide a common language for analysing and comparing companies.