The Return on Equity, or ROE, measures how efficiently a company uses Shareholders’ Equity to generate profits. It is calculated as the Net Profit for the year, divided by Average Book Value, or Equity, for the period. This is measured on a TTM basis and earnings are normalised.

Stockopedia explains ROE

This is defined as Income available to Common Shareholders (excluding Extraordinaries) divided by the Average Book Value over the period.

The DuPont formula is a common way to break down ROE into three important components. Essentially, ROE will equal the Net Margin multiplied by Asset Turnover multiplied by Financial Leverage.

Earnings are measured on a normalised basis.

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The 5 highest ROE Stocks in the Market

TickerNameROEStockRank™
NYQ:ABCAmerisourceBergen28805.7796
NYQ:PBTPermian Basin Royalty Trust12635.3670
TSE:DOLDollarama8430.5081
NYQ:NRTNorth European Oil Royalty Trust5529.9977
TSE:BBUCBrookfield Business2364.2954