What is the return on your own capital?
The return on equity or simply return on equity (ROE) refers to the amount of profitability experienced by the company through shareholder investments. It is expressed in the following equation: return on shareholders equal to net income divided by shareholders with their own capital. This formula may vary slightly depending on the source; However, most of the financial formulas on the return of shareholders of their own capital use similar elements and relationships. Of these shares, managers may want to maintain a majority, in this case 51 shares. Then they could sell another 49 pieces of the company for a specified value related to the total value of the company. When Company works well, its value increases, and therefore buying a piece of this company becomes more expensive - the opposite is true at a time of poor performance.
If a person buys a share of a new company for a small amountThe company will experience success so that its share value increases, that person may want to sell their ownership to obtain profit. This is the basis for shares trading. There are also a number of complex options for this trading and manipulating business success, all of which contribute to the esoteric stock market.
The formula for the return on shareholders of equity is best fits into the concept of the stock market as a whole. The company's net income, generally measured annually, describes its overall profits. This differs from gross income in that the expenses are deducted, which means that the net income reflects the Actual. If this number is divided by the summary of all shareholders' shares in the company, which is equal to the return on shareholders with their own value.
These calculations may seem trivial, but they are important in that they can provide specific information that can help all field players. ROE can tell investors, employees and analysts a number of thingsthe firm function of the company. ROE helps to compare different companies in the same industry and can provide investors with traces where the time to buy, sell or hold the company's shares is appropriate.