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La Shanda Haynesrespond in 150 wordsOE can be described as the management’s potential to generate a profit for every dollar of a common equity investment. EPS is also known as the tool that measures the return on a per-share source. ROE (return on equity) is an amount of financial performance that is calculated by dividing net income by a shareholder’s equity. Earnings per share (EPS) is computed as a company’s profit divided by the remaining shares of its common stock. The ROE and the EPS are both contributing factors to the financial value of the organization. ROE is a superior measurement over the EPS to find out how a company is utilizing its capital to build a valuable business. It can be understood that the higher the ROE is the extra wealth the company is generating for its shareholders, and the improved return they can anticipate from their initial investments. The EPS can be used as an indicator of whether the shares are being overvalued or undervalued. A company’s ROE should be compared to that of its competitors. A good ROE is between 15-20%. My calculations for AMZN (Amazon) for 2019 were 9.13% for the ROE and 42.60% for the EPS. The 9.13% is an indicator that the company is possibly being mismanaged or they are reinvesting their earnings into some assets that a

re not productive. The EPS indicates that the investors are selling good shares of stock.Reference Point:londonessays.com…
Addlyne Jacksonrespond in 150 wordsHi Everyone, If we think about return on equity as net income divided by average stockholder equity Then the number of shares outstanding then it may be a little bit easier to understand. I think ROE is a little easier to use than EPS when you think of total capital. One of the reasons One of the reasons why REO is so important is because This is what most most companies use to check the bottom line And make sure they and make sure they are making money. I’ve learned that if a company has a high ROE means that they are Making a large profit for their company And that is a company that you may want to invest in. If a company has a low low ROE. That the company is not making the best decisions when it comes to reinvesting in capital assets. They may need to step back and take another look on the decisions that they are making for their company. One drawback of using ROE Is that occasionally If you are not using the ratio correctly it can sometimes be misleading when you are not using non-monetary items. Brealey, R., Myers, S. C., Marcus, A. J. (2020). Fundamentals of corporate finance (10th ed). McGraw-Hill Education: New York, NY.