Remove Debt to Equity Ratio Remove Development Remove Innovation Remove Short-term
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End the Religion of ROE

Harvard Business Review

The revolution ran on equity capital, which was in short supply. Anyone would have concluded that allocating capital according to expected return on equity would be optimal for growth. The lesson: Return on Equity, like peacock tail splendor, is a very poor guide for allocating resources. It fails for two reasons.

ROE 12