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Glossary

ROE (return on equity)

How much the company earned in the year for each real of shareholders' equity.

What it is

How much the company earned in the year for each real of shareholders' equity. Shown on the stocks pages.

How Dados B3 calculates it

profit attributable to controlling shareholders ÷ average controlling equity (average of last year-end and this year-end). Not published when average equity is zero or negative. The same formula applies to banks.

Example

Illustrative example, with made-up numbers to keep the arithmetic easy: Profit of R$ 150 million and average equity of R$ 1 billion: ROE = 150 ÷ 1,000 = 15%.

What to watch for when reading it

• High debt can inflate ROE: compare with ROIC and ROA.
• This is not the 'managerial' ROE in the company's results release, which may use adjusted profit; here it is the one in the statements filed with the CVM.
• The stock page shows the full calculation (profit, equity figures and base date).

See also

• ROIC (return on invested capital)
• ROA (return on assets)
• P/B (price to book value)
• Payout ratio

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Educational content to understand what each number means. It is not a recommendation to buy or sell.