301 calculating returns
Dev Raga Personal Finance
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Return on Investment (ROI) - A Play on Numbers
return on equity equation is net income divided by average shareholder equity. company owes money which is tied to that equity Therefore leverage can magnify this equation significantly And therefore leverage adds an element of risk. The other major drawback of return on equity is when a company does a large share buyback Essentially what they're doing is shrinking the total average shareholder Equity. By shrinking the denominator in the equation, the overall return on equity value goes up But it's a play on numbers. Back to Mail Online home. Back to the page you came from.
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