While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. To keep the lesson grounded in practicality, we’ll use ROE to better understand Citychamp Watch & Jewellery Group Limited (HKG:256).
Our data shows Citychamp Watch & Jewellery Group has a return on equity of 1.5% for the last year. That means that for every HK$1 worth of shareholders’ equity, it generated HK$0.02 in profit.
How Do You Calculate ROE?
The formula for return on equity is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
Or for Citychamp Watch & Jewellery Group:
1.5% = HK$71m