Return on Equity $($ROE$)$ is a measure of how the stockholders fared during the year. Because benefiting shareholders is our goal, ROE is$,$ in an accounting sense, the true bottom$-$line measure of performance.

Breaking ROE into its constituent parts, by using the DuPont identity, identifies a firm$$s operating efficiency, asset use, and financial leverage. However, these measures rely upon accounting data that may or may not be useful.

Why would a firm have a negative ROE? Should investors buy stocks that have negative ROEs? What do you see as an alternative measure of how a firm benefits its shareholders?