Category Archives for "Profitability Ratio"

Return on Common Equity Ratio

This is a complete guide on how to calculate Return on Common Stockholders Equity (ROCE) ratio with detailed analysis, interpretation, and example. You will learn how to utilize its formula to assess a firm's profitability.

Definition - What is Return on Common Stockholders Equity (ROCE)?

The return on common stockholders equity ratio, often known as return on equity or ROE, allows you to calculate the returns a company is able to generate from the equity that common shareholders have invested in it.​

This ratio is a great tool for keeping tabs on a business you already own shares in, or for evaluating one you’re considering as an investment.

The more capable a company is of yielding a profit from equity, the higher its return on common equity will be.

This ratio lets you know exactly how much in net income a firm is producing from each dollar of the equity invested by its common shareholders.

As an investor, the return on stockholders' equity figure is not only important for showing you how effectively a company is using your money to generate returns, it also demonstrates how efficient the firm’s management team is at using equity to support ongoing operations, and to fund growth and expansion.

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Return On Retained Earnings Ratio

This is an ultimate guide on how to calculate Return on Retained Earnings Ratio (RORE) with in-depth analysis, interpretation, and example. You will learn how to use its formula to evaluate a firm’s profitability.

Definition - What is Return on Retained Earnings Ratio?

The return on retained earnings ratio (RORE) measures how effectively a company uses its profits from the previous years.

The ratio can inform investors whether the company is better off investing its profits back into the company, or paying its shareholders a dividend.

A high ratio suggests that the company should invest heavily in itself, while a low ratio means a company may benefit from paying a larger dividend.

It is not commonly used by investors to assess the attractiveness of an investment.

It is mostly used as a measure to aid a management company in decision making regarding dividend payouts.

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