Is there a difference between Return on Equity ROE and Return on Assets ROA ?

In simple terms, ROE is the percentage of net profit to the money invested by shareholders (excluding liabilities); Return on total assets is the percentage of net profit to all assets of the company, including both the money invested by shareholders and the part of liabilities.

Return on equity is the core indicator of an enterprise, which can better reflect the profitability of shareholder wealth.

Return on equity.

roe(rateofreturnoncommonstockholders'equity), return on equity is also known as return on equity return on equity return on equity return on equity return on equity return on equity.

It's net profit. The percentage to average shareholders' equity is the percentage ratio of the company's after-tax profit divided by its net assets, which reflects the level of income from shareholders' equity and is used to measure the efficiency of the company's use of its own capital. This indicator reflects the net income from own capital.

The higher the index value, the higher the return from own capital investment.

Extended Materials. 1. What is the ROE ROE formula?

Return on equity (ROE) = net profit after tax Net assets 100%. ROE is the return on net assets, which is used to measure the efficiency of the company's use of its own capital, which reflects the level of income from shareholders' equity and reflects the ability of its own capital to obtain net income. The higher the indicator value, the higher the return on investment.

Generally speaking, an increase in debt will also lead to an increase in return on equity, so when looking at ROE metrics, you should also pay attention to cash flow.

2. How to analyze the return on net assets?

Return on equity is the percentage of a company's net profit to average shareholders' equity, and it is also the percentage ratio of a company's after-tax profit divided by its net assets. It reflects the level of the company's shareholders' equity returns, is mainly used to evaluate the efficiency of the company's use of its own capital, and is also an important indicator to measure the profitability of the company. The factors that affect the return on net assets of an enterprise include the return on total assets, the interest rate on liabilities, the capital structure of the enterprise and the income tax rate.

The higher the value of the general indicator, the higher the return on investment. There is also a lower limit on the return on equity, which generally cannot be lower than the bank interest rate, otherwise, the profitability of the enterprise is too poor, and it is better to keep the money in the bank.

3. How to improve a company's ROE?

The safest and most enviable way is to increase the net profit margin.

However, it is the hardest to increase your net profit margin, because the market and industry determine the gross margin of your product.

The only thing you can improve is the cost. Either increase the asset turnover rate, such as small profits but quick turnover, which is contrary to increasing the net profit margin, or even if you sell at a lower price, it is difficult to increase the revenue and asset turnover rate due to the limited market space, which is contrary to your wishes. Either raise the equity multiplier.

The amount of borrowing is increased, but the increase in borrowing is accompanied by an increase in total assets, which in turn reduces the asset turnover ratio. It may seem like a simple indicator, but it contains countless secrets.

Return on equity.

About 15%-30% is more appropriate.

Extended information] Return on equity (ROE) is net profit.

Generally speaking, the increase in liabilities will lead to an increase in the return on equity, so the appropriate return on equity has become a question for many investors, and it will also affect the vital interests of investors.

This basis point is the most suitable, and there is a certain risk if it is too low. The return on equity is also known as return on equity, return on net worth, return on equity, return on equity, return on equity, and return on equity.

It is an important indicator to measure the profitability of listed companies.

It also refers to the amount of profit.

The ratio to the average shareholder's equity, the higher the shorting of this indicator, the higher the return on investment. The lower the ROE, the more equity the business owner.

The weaker the profitability, the indicator also reflects the net income of own capital.

ROE represents the expected return on net assets, and companies with ROE greater than 15% can be regarded as blue-chip stocks with good growth and good performance.

or white horse stocks. Expected return on net assets = after-tax profit Owner's equity, the higher the expected return on net assets of a general listed company, the better the company's profitability, and the greater the probability of investors buying the company's ** to obtain the expected returns.

If the return on net assets of a listed company reaches 10%, it is already considered excellent, if it can reach 20%, it is very good, belonging to the high-end enterprises in the industry, if the business is stable, you can consider buying it at a low price, if the return on equity is often stable more than 40%, then you can continue to pay attention.

Assuming that a company's return on equity is 5%, then it means that every 100 yuan of a company's shareholders invest in blind capital, and they can earn back 5 yuan of profit in a year; If the return on equity is 15%, it means that for every 100 yuan of shareholders' investment, they can earn back 15 yuan a year.

There is a difference between Return on Equity (ROE) and Return on Assets (ROA), and the differences are as follows:

1. Return on assets, also known as return on assets, abbreviated as ROA, is generally calculated by dividing net profit by the average of total assets at the beginning and end of the year. Return on equity, abbreviated as ROE, is calculated by dividing net profit attributable to shareholders by the weighted average of shareholders' equity for the year.

2. The biggest difference between ROA and ROE is that the former reflects the profitability of total assets; The latter is a profitability that reflects net assets (shareholders' equity). Owner's equity is also known as shareholder's equity.

3. Net assets are part of all assets of an enterprise, so the return on net assets is inevitably affected by the return on total assets of the enterprise. Under the condition that the interest rate on liabilities and capital composition remain unchanged, the higher the return on total assets, the higher the return on net assets.

Return on total assets is calculated as:

1. Return on total assets = (total profit + interest expense) 100% of average total assets; Among them, the average total assets = (total assets at the beginning of the period + total assets at the end of the period) 2.

2. Return on equity = net profit average net assets 100%; Among them, average net assets = (net assets at the beginning of the year + net assets at the end of the year) 2.

3. The denominator of this formula is "average net assets", and "year-end net assets" can also be used.

1. Return on shareholders (return on equity).

Return on equity (ROE) = benefits that shareholders can share Money that shareholders can share = Net profit Shareholders' equity.

Second, check the financial report and say that Yonghui supermarket ROE

2012-2016, 3. The significance of ROE figures.

With an ROE > 20%, it's a great company.

With an ROE of <7%, it may be a company that is not worth investing in.

1) The cost of capital is generally 2% 7%, at least it must be able to protect the capital;

2) Opportunity cost. If our money is invested in companies with low ROE, this money cannot be invested in companies with higher ROE, and we will miss the opportunity!

3) Long-term return 20% is a god-level investment.

Fourth, Warren Buffett looks at three indicators.

1) Long-term stable profitability:

It is not enough to look at profitability only for three years, it is better to look at it together for five years, it can't be fake, and it can't be fake.

2) Free cash flow: Cash is king!

3) Return to Shareholders (ROE): >20% is very good! "Hanming 7% don't vote! Excellent companies often have one thing in common: they have long-term, sustainable high ROE.

5. ROA return on total assets.

Return on Total Assets (ROA) = Net Profit Total Assets.

Return on equity (ROE) = net profit Shareholders' equity.

For example, Xiao Ming invested 200,000 yuan by himself, borrowed 800,000 yuan to start a business, and obtained a net profit of 200,000 yuan (after deducting expenses and taxes if any) at the end of the first year.

roa=20/（20+80）=20%

roe=20/20=100%

ROA reflects the profitability of total assets, and ROE reflects the profitability of one's own funds.

Both indicators reflect the profitability of a business.