Return on equity measures how much net income a company generates per dollar of shareholder equity — a common proxy for capital efficiency and management quality.
ROE rises not only when profit improves, but also when a company takes on more debt, since debt shrinks the equity denominator without necessarily improving the underlying business. A company with modest profitability but heavy leverage can post an eye-catching ROE that reflects financial engineering more than operational strength.
Live example: AAPL's current return on equity is 152.0% — generally considered strong capital efficiency. See the full AAPL forecast for its Fundamentals card.
Capital-light businesses tend to post structurally higher ROE than capital-intensive ones simply because they need less equity capital to generate the same revenue. ROE is most meaningful compared against a company's own multi-year trend and its direct sector peers.
Above 15% is generally considered strong, but the right benchmark depends on the sector — capital-light businesses structurally run higher ROE than capital-intensive ones.
Yes — a company can post an inflated ROE mainly by taking on more leverage rather than improving profitability. Always check ROE alongside debt-to-equity before treating a high reading as purely good news.
Profit margin measures profit per dollar of revenue; ROE measures profit per dollar of shareholder equity. A company can have a modest margin but a high ROE with a small equity base.
AAPL analysis shows this metric in context, or browse all S&P 500 tickers.
Educational research only — not investment advice.