What is Return On Equity

02:08: book value: value at the end of ownership; It can trade for a premium

04:39: the Premium (or Discount) which investors pay is a function of how fast they can add more book value to the company or pay you a dividend.

09:12: example-roe


  • a steady or increasing ROE is a company that knows how to reinvest their earnings
  • a declining ROE is symbolic of management that doesn't know how to reinvest their capital in successful assets. Companies like this should pay most of their earnings as a dividend


  1. cat.read
  2. topic.investment