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Return on Equity (ROE) measures how efficiently a company generates profit from shareholders' equity. It shows how much net income is produced for every pound or dollar of equity invested. ROE = Net income / Shareholders' equity.

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1. 1Find net income from the income statement
2. 2Find average shareholders' equity: (start + end equity) / 2
3. 3ROE (%) = (Net income / Average equity) × 100
4. 4Decompose using DuPont analysis: ROE = Profit margin × Asset turnover × Equity multiplier

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