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Postby chandniwadhwani92 » Tue Nov 04, 2014 5:19 pm

Difference between return on equity and market value of equity

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Postby edupristine » Wed Nov 05, 2014 10:23 am

1) Return on Equity

Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

ROE is expressed as a percentage and calculated as:
Return on Equity = Net Income/Shareholder's Equity

Market value of equity

For example, if a company's stock is currently valued at $100 per share and there are a total of five million outstanding shares, the company's market value of equity is $500 million ($100 per share x 5 million shares = $500 million).

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