What does return on equity mean?

How much profit the company earns on the money shareholders have invested.

How do you interpret return on equity?

Higher is better, but very high ROE can be manufactured by leverage — a thin equity base inflates the ratio. Read it next to debt-to-equity and ROIC to tell genuine returns from balance-sheet engineering.

How does return on equity compare across companies?

Comparable across peers, with the leverage caveat. Negative or near-zero equity makes ROE meaningless, so it is suppressed there.

McKesson MCK Return on equity

Discontinued — last reported Q2 '21

Return on equity at other companies

Eli LillyLLY

107.6%+29.9pp

CencoraCOR

130.6%-99.8pp

ViatrisVTRS

-2%-0.9pp

Becton, Dickinson and CompanyBDX

4.6%-1.3pp

CVS HealthCVS

3.8%-3.2pp

Merck & Co.MRK

19%-20.3pp

Other financials

Income statement

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Revenue$96.3B+6.0%

Gross profit$4.0B+11.1%

Operating income$2.2B+35.1%

Net income$1.7B+33.5%

EPS (diluted)$13.65+37.6%

Balance sheet

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Cash & equivalents$4.0B-33.3%

Total debt$2.3B-74.2%

Total equity-$2.2B-4.7%

Total assets$82.3B+9.6%

Cash flow

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Operating cash flow$3.4B-55.9%

CapEx$111.0M-34.3%

Free cash flow$3.3B-56.3%

Valuation

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Market cap$91.3B+25.7%

Enterprise value$89.6B+19.6%

P/E19.2×-2.9×

P/S0.2×0.0×

Profitability

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Gross margin3.6%-0.1pp

Operating margin1.5%+0.3pp

Net margin1.2%+0.3pp

Returns & leverage

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Debt / equity2×—

Current ratio0.9×0.0×

Where this comes from

Calculated from McKesson’s reported figures.

net income/total stockholders equity=36%

Based on trailing twelve months.

The official record: McKesson’s 10-Q, filed November 2, 2021, on SEC EDGAR. View the filing →

Questions, answered.

What does return on equity mean?: How much profit the company earns on the money shareholders have invested.
How do you interpret return on equity?: Higher is better, but very high ROE can be manufactured by leverage — a thin equity base inflates the ratio. Read it next to debt-to-equity and ROIC to tell genuine returns from balance-sheet engineering.
How does return on equity compare across companies?: Comparable across peers, with the leverage caveat. Negative or near-zero equity makes ROE meaningless, so it is suppressed there.