ROE, ROCE & EBITDA

ROE (Return on Equity) = net profit divided by shareholders' equity - how much profit a company generates for every rupee shareholders have invested. ROCE (Return on Capital Employed) = operating profit divided by (equity plus debt) - a broader measure that also credits (or penalizes) how efficiently the company uses borrowed money, not just owners' money. A company with high ROE but heavy debt can look more efficient on ROE alone than it really is; comparing ROE and ROCE together gives a fuller picture. EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) strips out financing costs, tax, and non-cash accounting charges to show a company's core operating profitability - useful for comparing operating performance across companies with very different debt levels or tax situations, though it deliberately ignores real costs (interest, taxes) that a company still has to actually pay.