The return on equity $($ROE$)$ ratio, calculated by dividing net income by shareholders' equity and multiplying by $100$ to get a percentage, measures a company's ability to generate profit from shareholders' investments. A higher ROE indicates efficient use of equity capital to generate earnings. It is a key performance metric for investors, providing insights into the company's profitability and management effectiveness. ROE helps investors compare the profitability of different companies and make informed investment decisions, indicating the potential for growth and return on investment.