I am not writing much today, but just sharing a video I’ve created to demystify the very important concept of Return on Equity or ROE.
For starters, ROE measures the return earned by a company on its equity capital, or the capital that belongs to equity shareholders of the company, which includes part of profit that the company retains every year after paying dividends.
A business that earns a high ROE is more likely to be one that is capable of generating cash internally and thus has lesser or no need of external capital (debt) to grow its operations.
There’s a lot of stuff that can be written on this subject, but here is the video that goes a bit beyond the basics…
Click here if you can’t see the video above.
Let me know your feedback on the video in the Comments section of this post. That will help me assess whether I should prepare similar videos in the future, or just settle with writing my wordy posts. 🙂