Return on Equity measures a company’s profitability as well as efficiency. It lets you know how well the business uses the capital available and performs compared to its competitors in the same industry. RoE is arrived at by dividing the net income by equity. \r\rAs a thumb rule, an RoE over 10% is acceptable, and anything above 15-20% is considered good. However, the baseline RoE will differ from industry to industry. For example, service businesses, such as those in the technology or retail space, tend to deliver higher RoE compared to capital intensive industries, such as manufacturing or energy.