Return on investment

Hi Eleonore,

Thank you for your question.

After looking at the slides for the course you attended, the Return on Equity = Profit After Tax / Ordinary Shareholders Funds(Equity).

I believe by looking though a few forums that the following is true:

Return on equity is calculated as net profit (after tax profit) divided by equity. It shows the net performance of the company in relation to the equity invested in the company by the shareholders.

I hope this helps.

Regards

Simon