Cover Page

Discussion

It can be said that investing in the company A can be good for the shareholders as it

holds higher ROE if it is compared to company B.

The circumstances under which one can choose to be a shareholder of Company A

will be based on the return on equity because it is a performance through which the net

income of shareholder’s equity can be calculated (Siregar et al., 2021). It can be calculated as

return on equity or net income associated with equity of shareholders. The other reason

would be that shareholder’s equity is equal to the assets of the organization minus the

liabilities. Through the help of return on equity (ROE), one can become aware as to how

good or bad the company may become in the coming years or how the company’s

performance is throughout the year. A good rule of thumb that should be applied while

becoming a shareholder in a company is that the ROE should be equal to or a little above the

average of a company or with the same business firms. It is because if a shareholder wants to

become a part of the company the person will look into the ROE. This is because through this

the shareholder can finally conclude whether the person wants to become a part or not (Yanto

et al., 2021). Because the shareholder always thinks of long-term gains and if the shareholder

founds that the company cannot make any profit in the long term because of its ROE then the

person moves to some other company for a better ROE in long term.
 Reference

Siregar, Q. R., Rambe, R., & Simatupang, J. (2021). PengaruhDebt to Equity Ratio, Net

Profit Margin dan Return On Equity Terhadap Harga Saham Pada Perusahaan

Property dan Real Estate yang Terdaftar di Bursa Efek Indonesia. Jurnal AKMAMI

(Akuntansi Manajemen Ekonomi), 2(1), 17-31. [Accessed by

http://jurnal.ceredindonesia.or.id/index.php/akmami/article/download/124/130 ]

Yanto, E., Christy, I., & Cakranegara, P. A. (2021). The Influences of Return on Asset,

Return on Equity, Net Profit Margin, Debt Equity Ratio and Current Ratio Toward

Stock Price. International Journal of Science, Technology & Management, 2(1), 300-

312. [Accessed by https://ijstm.inarah.co.id/index.php/ijstm/article/download/155/90 ]