Return on Equity (ROE): Why Warren Buffett Considers It Essential

By Drift Striker · February 28, 2026

Most investors understand that profits matter. What separates sophisticated investors from the crowd is understanding how a company generates those profits relative to the capital employed to create them. Return on Equity—the ratio of net income to shareholders’ equity—measures exactly this. It tells you whether a company is generating genuine wealth from shareholder capital or […]