Return on Shareholders’ Equity:

Return on Shareholders’ Equity:

The relationship between return and the shareholders’ equity or owners’ funds.

It measures the return on the owners investment in the firm.

The shareholders of a firm fall into 2 categories:

Preference Shareholders,

Equity shareholders.

Preference shareholders will give preference right over dividends first than to the equity shareholders.

Return on shareholders’ equity classified into:

(1) Rate of return on

(i) Total shareholders’ equity,

(ii) Equity of ordinary shareholders.

(2) Earnings per share,

(3) Dividends per share,

(4) Dividend-pay-out ratio,

(5) Dividends and Earnings yield,

(6) Price-earnings ratio,

(7) Cash earnings per share,

(8) Book value per share,

(9) Price-to-book value per share.