7/3/2023 0 Comments Its plc sur startimesDepending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Why Is ROE Important For Earnings Growth? Another way to think of that is that for every £1 worth of equity, the company was able to earn £0.11 in profit. The 'return' is the amount earned after tax over the last twelve months. So, based on the above formula, the ROE for Sureserve Group is:ġ1% = UK£5.3m ÷ UK£47m (Based on the trailing twelve months to March 2020). Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity ROE can be calculated by using the formula:
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