return on equity

Definition

How much profit a company generates per dollar of shareholder investment, or as executives call it, the only number that matters. Because shareholders' yachts don't buy themselves.

Example Usage

The board demanded improvements to return on equity, which led to layoffs and a boost in the stock price.

Source: Financial analysis and corporate finance

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sunk cost fallacy

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clawback

A provision requiring executives to return compensation if certain conditions aren't met or if it was based on fraudulent numbers. It's the corporate version of 'give that back right now.'

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footnote disclosure

Additional information buried in the tiny print at the end of financial statements, where companies hide things they're legally required to disclose but hope nobody reads. It's where the interesting stuff actually lives.

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tax shield

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Portfolio

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Chinese wall

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