Executive & Board / Corporate Finance
Return on Equity ROE (DuPont decomposition)
How much profit the company earns on the money shareholders have invested and retained in the business.
The fork, why two teams get different numbers
The numerator forks between GAAP net income and an adjusted net income that strips one-timers; the denominator between ending shareholders' equity and average equity over the period.
In the Metric Library
- The full fork, both definitions worked all the way through
- The trap that makes the number lie, on a real export
- Every formula variant, spelled out
- The reconciliation anchor, what to tie it to and when to refuse
Reference: CFA Institute (DuPont / ROE analysis) · FASB ASC 505 (Equity)