The return on equity (ROE) is a measure of the profitability of a business in relation to its equity; where: ROE = Net Income/Average Shareholders' Equity Thus, ROE is equal to a fiscal year's net income (after preferred stock dividends, before common stock dividends), divided by total equity (excluding preferred shares), expressed as a percentage. Because shareholder's equity can be calculated by taking all assets and subtracting all liabilities, ROE can also be thought of as a return on NAV, or assets less liabilities. Usage ROE measures how many dollars of profit are generated for each dollar of shareholder's equity, and is thus a metric of how well the company utilizes its equity to generate profits. ROE is especially used for comparing the performance of companies in the same industry. As with return on capital, a ROE is a measure of management's ability to generate income from the equity available to it. ROEs of 15–20% are generally considered good.ROE is also a factor in stock valuation...

Accounting ratios and formulas streamline the bookkeeping process and help you evaluate your company's finances. Learn how these ratios and formulas work.

Liquidity is a concept in economics involving the convertibility of assets and obligations. It can include: Market liquidity, the ease with which an asset can be sold Accounting liquidity, the ability to meet cash obligations when due Liquid capital, the amount of money that a firm holds Liquidity risk, the risk that an asset will have impaired market liquiditySee also Liquid (disambiguation) Liquidation (disambiguation)

Accounting ratios and formulas streamline the bookkeeping process and help you evaluate your company's finances. Learn how these ratios and formulas work.

Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. Solvency can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term expansion and growth. This is best measured using the net liquid balance (NLB) formula. In this formula, solvency is calculated by adding cash and cash equivalents to short-term investments, then subtracting notes payable. There exist cryptographic schemes for both proofs of liabilities and assets, especially in the blockchain space. See also Accounting liquidity Debt ratio Going concern Insolvency Quick ratioNotes References Gaist, Paul A (2009). Igniting the Power of Community: The Role of CBOs and NGOs in Global Public Health. Springer. ISBN 978-0-387-98156-7. OCLC 310400989....

This guide identifies common business liabilities that every small business owner should keep track of and understand.

Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. Bankrupt is not the only legal status that an insolvent person may have, and the term bankruptcy is therefore not a synonym for insolvency. Etymology The word bankruptcy is derived from Italian banca rotta, literally meaning "broken bank". The term is often described as having originated in renaissance Italy, where there allegedly existed the tradition of smashing a banker's bench if he defaulted on payment so that the public could see that the banker, the owner of the bench, was no longer in a condition to continue his business, although some dismiss this as a false etymology. History In Ancient Greece, bankruptcy did not exist. If a man owed and he...