Significance of Return on equity
Return on equity is a financial performance measure utilized in empirical research. Studies often control for return on equity when analyzing various factors related to a company. These factors can include firm size, book value to market value ratio, financial leverage, listing age, tangible assets, cash holdings, and sales growth. Return on equity serves as a benchmark when evaluating a company's financial health and operational efficiency.
Synonyms: Profitability, Return on investment, Roi, Earnings performance, Financial performance, Roe, Shareholder return
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The concept of Return on equity in scientific sources
Return on equity (ROE) is a financial performance metric used in research. It's also a controlled variable alongside factors like firm size, leverage, and asset tangibility to analyze company performance.
From: Sustainability Journal (MDPI)
(1) The percentage of a company's after-tax profits divided by its net assets is the return on equity, also known as Roe, which is a control variable.[1] (2) A financial ratio that measures the profitability of a company relative to shareholders' equity, used as an alternative measure of value.[2] (3) Return on equity is an economic performance indicator, extracted from the literature and listed in Table 8, with Kocmanova et al., 2017 b as one of its sources.[3] (4) The result of the research showed that Return on Equity (ROE) and Return on Capital Employed (ROCE) were significant, which are indicators used in this study.[4] (5) Scientists have used financial models, including the WACC, internal rate of return (IRR), return on equity (ROE), debt service coverage ratio (DSCR), and net profit, for a comprehensive financial assessment.[5]
From: International Journal of Environmental Research and Public Health (MDPI)
(1) Return on equity (ROE) is a measure of a firm’s profitability, calculated as earnings divided by book equity, and the interaction between ExtremeTemperature * ROE is significant.[6]