___Return on equity reveals how much revenue a company earned in comparison to the total amount of shareholder equity found on the balance sheet, Many analysts consider ROE the single most essential financial ratio applying to stockholders and the best measure of performance by a firm's management.
one year's earnings
ROE =-----------------------------
shareholder equity
The ROE for service-oriented industries, such as the Software industry Advertising agencies, is significantly higher than that of capital-intensive industries such as the construction industry. telecommunication providers, car manufacturers, and railroads.a healthy company may produce an ROE in the 13% to 15% range.(Note this site give intraday calls)
Examble ; Company ABC earned 500 crore in net income. Its equity capital in the beginning of the year were 1000 crore , and at the end of the year were 2000 crore. Therefore, the company's ROE during the year was 33% [($5 million million)/(($10m + $20m)/2)].
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