die
Eigenkapitalrendite
📊 What does 'die Eigenkapitalrendite' mean?
Die Eigenkapitalrendite (often abbreviated as EKR or known in English as ROE for Return on Equity) is a key financial ratio that measures how efficiently a company uses its equity (Eigenkapital) to generate profit (Gewinn or Jahresüberschuss). It indicates the percentage of profit a company earns in relation to its shareholders' equity.
The formula is:
Return on Equity = (Net Income / Average Shareholder Equity) * 100%
In German terms: Eigenkapitalrendite = (Jahresüberschuss / Durchschnittliches Eigenkapital) * 100%
A high Eigenkapitalrendite is often seen as a positive sign of a company's profitability and financial health, but it can also be influenced by high debt levels. It's particularly relevant for shareholders and investors as it shows how well their invested capital is 'working'.
The word is feminine in German, so it's always die Eigenkapitalrendite.
Article rules for der, die, and das
-e/-ee → almost always feminine.
There are many -e nouns, many of which are feminine, but there are also some important exceptions.
🧐 Grammar Insights: Die Eigenkapitalrendite
The word "Eigenkapitalrendite" is a feminine noun. It is generally used only in the singular form because it describes a specific metric. A plural form is grammatically possible ("die Eigenkapitalrenditen") but rare, typically referring to the returns of multiple periods or companies.
Declension Singular
| Case | Article | Noun |
|---|---|---|
| Nominative (Who/What?) | die | Eigenkapitalrendite |
| Genitive (Whose?) | der | Eigenkapitalrendite |
| Dative (To whom?) | der | Eigenkapitalrendite |
| Accusative (Whom/What?) | die | Eigenkapitalrendite |
💡 Example Sentences
- Die Eigenkapitalrendite des Unternehmens ist im letzten Jahr gestiegen.
(The company's return on equity increased last year.) - Analysten achten genau auf die Entwicklung der Eigenkapitalrendite.
(Analysts pay close attention to the development of the return on equity.) - Mit einer hohen Eigenkapitalrendite zieht das Unternehmen Investoren an.
(With a high return on equity, the company attracts investors.) - Wir müssen die Faktoren hinter der niedrigen Eigenkapitalrendite untersuchen.
(We need to investigate the factors behind the low return on equity.)
📈 Usage in Context
Die Eigenkapitalrendite is primarily used in the following contexts:
- Financial Analysis: To assess the profitability and efficiency of companies (Unternehmen).
- Investment Decisions: Investors (Investoren) use the EKR (ROE) to compare potential investments.
- Corporate Management: Management uses the ratio to monitor performance (Leistung) and set goals (Ziele).
- Business Reporting: Journalists and analysts report on the EKR of publicly traded companies.
Important Note: A high EKR is not always positive. It can be artificially inflated by high debt (hohe Verschuldung), meaning low equity relative to total assets. Therefore, it should always be considered alongside other metrics like Return on Assets (Gesamtkapitalrendite) or the debt-to-equity ratio (Verschuldungsgrad).
🧠 Mnemonics for Eigenkapitalrendite
Article Mnemonic: The base word is "die Rendite" (the return/yield). Since Rendite is feminine, the compound noun Eigenkapitalrendite is also feminine: die Eigenkapitalrendite.
Meaning Mnemonic: Think of the components: Eigen (own) + Kapital (capital) + Rendite (return). So, it's the return on your own invested capital.
🔄 Synonyms and Related Terms
Synonyms
- Eigenkapitalrentabilität: A very common synonym in German.
- ROE (Return on Equity): The English abbreviation, frequently used in German contexts too.
- Unternehmerrentabilität: Less common, emphasizes the owner's/entrepreneur's perspective.
Antonyms (Conceptual)
- Verlust (Loss): Instead of a return, a loss is generated on equity.
- Negative Eigenkapitalrendite: The explicit term for a loss relative to equity.
- Kapitalvernichtung (Capital destruction): A more drastic term for persistent negative returns.
Similar, but different terms ⚠️
- Gesamtkapitalrendite (ROA - Return on Assets): Measures the return on total capital employed (equity + debt).
- Umsatzrendite (ROS - Return on Sales): Measures profit relative to revenue/sales (Umsatz).
😄 A Little Financial Joke
Fragt der Aktionär den CEO: "Wie schaffen Sie es, jedes Jahr die Eigenkapitalrendite zu steigern?"
Antwortet der CEO: "Ganz einfach! Wir definieren 'Eigenkapital' jedes Jahr neu!" 😉
(Shareholder asks the CEO: "How do you manage to increase the return on equity every year?"
CEO replies: "Simple! We redefine 'equity' every year!") 😉
📜 Poem about Return
Das Kapital, das mir gehört,
Soll Früchte tragen, ungestört.
Die Firma schafft, der Rubel rollt,
Wie viel zurückkommt, das wird gewollt.
Prozente zeigen klar und rein,
Wie gut der Einsatz konnte sein.
Die Eigenkapitalrendite fein,
Lässt Investoren-Herzen höher schrei'n!
(The capital that belongs to me,
Should bear its fruit, undisputedly.
The company works, the money flows,
How much returns, everyone knows (or wants to).
Percentages show, clear and pure,
How good the investment could endure.
The fine Return on Equity,
Makes investors' hearts beat with glee!)
❓ Riddle Time
Ich bin ein Maß, in Prozent gezählt,
Zeige, was dem Eigner nicht fehlt.
Wie viel Gewinn aus dem Kapital,
Das selbst gehört, ganz ohne Qual?
Investoren schauen auf mich genau,
Bin ich hoch, rufen sie "Wow!".
(I am a measure, counted in percent,
Showing what the owner hasn't misspent.
How much profit from the capital,
That's self-owned, without travail?
Investors watch me very keen,
If I am high, they shout "Wow!", it would seem.)
(Solution: die Eigenkapitalrendite / Return on Equity)
🧩 Word Breakdown and More
Word Composition
The word "Eigenkapitalrendite" is a compound noun (ein Kompositum), made up of three parts:
- Eigen: Adjective meaning 'own' or 'belonging to oneself'.
- Kapital: Noun (das Kapital) meaning 'capital, assets, funds'.
- Rendite: Noun (die Rendite) meaning 'return, yield, profit from an investment'.
Together, the meaning is: The return (Rendite) on one's own (Eigen) capital (Kapital).
Trivia
- What constitutes a "good" Eigenkapitalrendite heavily depends on the industry and the overall economic climate. Values between 10% and 20% are often considered solid.
- Companies can boost their ROE in the short term through share buybacks, as this reduces the amount of equity on the balance sheet.
📝 Summary: is it der, die or das Eigenkapitalrendite?
The German word Eigenkapitalrendite is a feminine noun. The correct article is die. It refers to a key financial ratio (Return on Equity, ROE) that measures profitability relative to shareholders' equity.