Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
The percentage indicates the value in terms of the hundredth part of an amount. The percentage can also be explained like the interest rate is 10% which means on a loan of $100, the interest is $10. The increase in percentage results in higher interest on the loans. Because interest is directly calculated on the amount of the loan.
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