GlossaryIntermediate
Return on Equity (ROE)
A traditional profitability ratio measuring how efficiently a company generates profit from its shareholders' equity capital.
Return on Equity (ROE) divides a company's net income by its shareholder equity, measuring how efficiently it converts the capital shareholders have invested into profit.
ROE is a traditional corporate-finance concept Kaavon covers for context when analyzing crypto-adjacent companies (such as exchanges or miners with real audited financials) — it has no direct equivalent for a decentralized protocol or token without a comparable corporate equity structure. See Kaavon's dedicated ROE article for the full calculation.
Examples
- ROE is commonly used to compare how efficiently different companies within the same industry convert shareholder capital into profit.
- A decentralized protocol with no shares or corporate equity structure has no direct ROE equivalent, even if it generates real revenue.