How much profit the shareholders' money earned
Return on equity is net income divided by shareholders' equity, as a percentage. It measures how efficiently the money shareholders put in was turned into profit over a year. Higher reads as more efficient, but borrowing more shrinks equity and lifts ROE on its own, so read it alongside the equity ratio.
Net income of $20 million on equity of $200 million is an ROE of 10% — that equity produced $20 million in a year.
Japan — In Japan, 8% or more is often quoted as a benchmark (as of 2026).
South Korea — Korea has no official ROE benchmark. Since May 2024 listed companies can file a "corporate value-up plan" with the exchange, and its guideline asks them to set ROE against the cost of equity.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.