ROE

ROE stands for Return On Equity. The ROE can be calculated as:

${\text{ROE}}={\frac {NI}{S}}\cdot {\frac {S}{TA}}\cdot {\frac {TA}{EQ}}$

Where: $TA$ = Total Assets (which is debt + equity) $EQ$ = Total Equity $S$ = Sales $NI$ = Net Income

And:

• ${\frac {NI}{S}}$ => Profitability

• ${\frac {S}{TA}}$ => Asset turnover

• ${\frac {TA}{EQ}}$ => Leverage