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what can we understand from the ROE ratio of the company and if the net profit and the shareholders funds are increasing and ROE remains constant then what does it tell us and if net profit is declining over years is it necessary that ROE will also decline
The return on equity ratio is generally accepted to be a flawed ratio for most purposes.The reason for this is because it takes no account of the capital structure of companies.For this reason ratios such as return on capital employed and earnings per share are used as more reliable indicators of performance of companies.
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