What is meant by Return on equity and debt ratio?
Return on Equity (ROE) is a measure of a company's profitability, indicating how efficiently the company uses its equity to generate profit. It is calculated by dividing the net income by the shareholders' equity.
Debt Ratio is a measure of a company's indebtedness, indicating the proportion of debt in relation to total capital. It is calculated by dividing total debt by total capital.
Typical Functions of Software in the Area of Return on Equity and Debt Ratio:
- Calculation and Analysis: Automatic calculation of return on equity and debt ratio based on current financial data.
- Report Generation: Creation of detailed reports and charts showing the development and trends of these metrics.
- Benchmarking: Comparing the metrics with industry-specific benchmarks and historical data to evaluate company performance.
- Scenario Analysis: Conducting scenario analyses to assess the impact of different financial strategies on return on equity and debt ratio.
- Monitoring and Alerts: Real-time monitoring of the metrics and automatic alerts when critical thresholds are reached.
- Integration: Seamless integration with other financial and accounting systems to capture and process relevant data.
