Is Expedia Group, Inc.’s (NASDAQ:EXPE) 44% ROE Better Than Average?

One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. We’ll use ROE to examine Expedia Group, Inc. (NASDAQ:EXPE), by way of a worked example.

Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company’s shareholders.

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How Do You Calculate Return On Equity?

The formula for ROE is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity

So, based on the above formula, the ROE for Expedia Group is:

44% = US$1.2b ÷ US$2.8b (Based on the trailing twelve months to December 2024).

The ‘return’ refers to a…