What Is the Connection Between Return on Equity and Cost of Equity?

Return on equity = Net income / (Beginning capital + Ending capital) / 2 When a company achieves a higher level of return on equity, it shows that it is efficient in using the assets provided by shareholders. Therefore, the company will increase the value of equity at a higher rate, which will also increase the stock price accordingly.

Return on equity

There is a relationship between the company's return on equity and future earnings trends, which is

4.EPS = Earning Per Share (Earnings per share, also known as after-tax profit per share, earnings per share)

Earnings per share = Net profit at the end of the period / Total equity at the end of the period

A basic indicator for analyzing the value of each share. Earnings per share highlights the amount of profit allocated to each stock, which is the basis for pricing on the stock market at the price-earnings ratio.

5.DIV (Dividend Income)

Also called "bonus". Refers to the profit distributed by a joint stock limited company to shareholders based on the shares issued. According to the company's articles of association, the companies organized by the company usually distribute shareholders' investment returns in a certain amount from the net after-tax profits according to the shares on time.

The types of dividends mainly include cash dividends, stock dividends, property dividends, debt dividends and liquidation dividends

6. Dividend yield

Dividend Yield = Cash Dividend per Ordinary Share / Earning Per Share Amount

Dividend yield is an indicator reflecting the company's dividend policy, indicating the proportion of dividends distributed by the company in net income