What is return on equity?

Question

It seems very important but I can't really understand the definition. Can someone please explain what it means while speaking in English?

Answer 1

Return on Equity (ROE) is a measure of how much money a company is making.  Equity is just another word for ownership of a company.  When you own shares of stock in a company, you own equity in that company.  ROE just measures how much of a return the stockholders are making.  A company with a high ROE tends to attract more stockholders, which in turn can be positive for the stock price.  

Answer 2

Equity equals ownership. As a stock holder, you are an owner. Roughly speaking ROE is just the return you get in an investment.  

Answer 3

Equity refers to the shares of the company. Return on equity means the profit you get for holding the share of a company