This ratio is an adjustment of the original ROE - Return on Equity and it gives in percentage terms the net profitability of the equity's book value adjusted.
As we know, the equity's book value account also dividends in the retained earnings subaccount. So, the ROE Adjusted wants to take out any transaction in the benefit of the company's stockholders where is a dividend or is capital injection as shareholding financing.
The ratio is between the net income and the adjusted equity as per the following formula:
NET INCOME / (EQUITY'S BOOK VALUE - DIVIDENDS - SHAREHOLDING FINANCING)
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