ROE is calculated as net profit divided by shareholders' equity — it tells you how efficiently a company is using the money that actually belongs to shareholders (as opposed to ROCE, which also counts borrowed money). A high ROE looks great, but it's worth checking why it's high: genuinely efficient operations are one reason, but so is simply taking on a lot of debt (which boosts ROE without necessarily making the business better). That's why we never look at ROE alone — always alongside the balance sheet and debt levels.