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![EquityInsightss Avatar](https://lunarcrush.com/gi/w:24/cr:twitter::1350714811546419204.png) Equity Insights Elite [@EquityInsightss](/creator/twitter/EquityInsightss) on x 46.8K followers
Created: 2025-07-13 06:50:16 UTC

📌Return On Equity (RoE) ~ Key metric for Equity Investors

Everything you need to know⏬

✅ROE = Net Profit ÷ Shareholder's Equity

Shareholders’ Equity = Total Assets – Total Liabilities (a.k.a. Net Worth / Book Value)

– Shows profit generated per rupee of equity
– Higher ROE ⇒ more efficient at creating shareholder returns
– Varies by sector, so best compared among peers in the same industry

Factors that can distort ROE
– One‑off gains (asset revaluations, extraordinary income) can temporarily inflate ROE
– Equity issuance like QIP dilutes ROE
– RoE be boosted by higher financial leverage or share buybacks
– Intangible write‑offs reduce equity base and lift ROE

Use 3/5 yr average ROE to iron out cyclicality
Compare ROE to cost of equity: Persistently above cost of equity indicates value creation

DuPont Analysis helps break down Return on Equity (ROE) into key components

X. Net Profit Margin = Net Profit / REV
X. Asset Turnover = REV / Total Assets
X. Financial Leverage = Total Assets / Equity

ROE = Net Profit Margin × Asset Turnover × Financial Leverage
  = (Net Profit / REV) × (REV / Assets) × (Assets / Equity)

Sustainable Growth Rate (SGR)
– Shows Max growth a firm can self-fund from retained earnings

Formula: SGR = ROE × (1 – Dividend Payout Ratio)
– Eg: ROE : XX %, Payout : XX % ⇒ SGR ≈ XXXX %

Growing above SGR → needs extra debt/equity
Growing below SGR → surplus cash, room for higher payouts


XXXXXX engagements

![Engagements Line Chart](https://lunarcrush.com/gi/w:600/p:tweet::1944288249712980091/c:line.svg)

**Related Topics**
[generated](/topic/generated)

[Post Link](https://x.com/EquityInsightss/status/1944288249712980091)

[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]

EquityInsightss Avatar Equity Insights Elite @EquityInsightss on x 46.8K followers Created: 2025-07-13 06:50:16 UTC

📌Return On Equity (RoE) ~ Key metric for Equity Investors

Everything you need to know⏬

✅ROE = Net Profit ÷ Shareholder's Equity

Shareholders’ Equity = Total Assets – Total Liabilities (a.k.a. Net Worth / Book Value)

– Shows profit generated per rupee of equity – Higher ROE ⇒ more efficient at creating shareholder returns – Varies by sector, so best compared among peers in the same industry

Factors that can distort ROE – One‑off gains (asset revaluations, extraordinary income) can temporarily inflate ROE – Equity issuance like QIP dilutes ROE – RoE be boosted by higher financial leverage or share buybacks – Intangible write‑offs reduce equity base and lift ROE

Use 3/5 yr average ROE to iron out cyclicality Compare ROE to cost of equity: Persistently above cost of equity indicates value creation

DuPont Analysis helps break down Return on Equity (ROE) into key components

X. Net Profit Margin = Net Profit / REV X. Asset Turnover = REV / Total Assets X. Financial Leverage = Total Assets / Equity

ROE = Net Profit Margin × Asset Turnover × Financial Leverage   = (Net Profit / REV) × (REV / Assets) × (Assets / Equity)

Sustainable Growth Rate (SGR) – Shows Max growth a firm can self-fund from retained earnings

Formula: SGR = ROE × (1 – Dividend Payout Ratio) – Eg: ROE : XX %, Payout : XX % ⇒ SGR ≈ XXXX %

Growing above SGR → needs extra debt/equity Growing below SGR → surplus cash, room for higher payouts

XXXXXX engagements

Engagements Line Chart

Related Topics generated

Post Link

post/tweet::1944288249712980091
/post/tweet::1944288249712980091