Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). We’ll use ROE to examine United Airlines Holdings, Inc. (NASDAQ:UAL), by way of a worked example.
Return on equity or ROE is a key measure used to assess how efficiently a company’s management is utilizing the company’s capital. In simpler terms, it measures the profitability of a company in relation to shareholder’s equity.
Check out our latest analysis for United Airlines Holdings
Return on equity can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for United Airlines Holdings is:
28% = US$2.6b ÷ US$9.3b (Based on the trailing twelve months to December 2023).
The ‘return’ is the income the business earned over the last year. Another way to think of…
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