![]() ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = profit margin × asset turnover × financial leverage However, this can be deceiving as each company has varying costs of equity and debt levels, which could exaggeratedly push up ROE at the same time as accumulating high interest expense. If investors diversify their portfolio by industry, they may want to maximise their return in the Industrial Machinery sector by investing in the highest returning stock. ![]() ![]() An ROE of 10.8% implies €0.11 returned on every €1 invested, so the higher the return, the better. Return on Equity (ROE) is a measure of DMG MORI’s profit relative to its shareholders’ equity. View our latest analysis for DMG MORI Breaking down Return on Equity ![]() Metrics such as financial leverage can impact the level of ROE which in turn can affect the sustainability of GIL's returns. But what is more interesting is whether GIL can sustain or improve on this level of return. The content of this article will benefit those of you who are starting to educate yourself about investing in the stock market and want to learn about Return on Equity using a real-life example.ĭMG MORI AKTIENGESELLSCHAFT ( FRA:GIL) performed in line with its industrial machinery industry on the basis of its ROE – producing a return of 10.8% relative to the peer average of 13.4% over the past 12 months. ![]()
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