Return on Equity (ROE) 

Return on Equity (ROE) measures a company’s ability to generate net profits from shareholders’ equity. It’s one of the most widely used profitability ratios to assess the financial performance of businesses and indicates how well a company rewards its equity investors. 

Formula: 

ROE (%) = (Net Income / Shareholders’ Equity) × 100    

A higher ROE signifies better financial efficiency and profitability relative to the shareholders' investment. However, excessively high ROE might also indicate over-leverage or risky financial practices, so it’s typically evaluated alongside other financial metrics.