A company's return on equity, or ROE, is a percentage that indicates how well stockholders' money is being used. To determine ROE divide a company's net earnings by the common stockholders' equity. To determine common stockholders' equity, multiply the number of outstanding common shares by the price per common share. ROE is a useful tool to compare the financial health of different companies. Investors who want to see how a company is doing can compare its ROE to that of its competitors.