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Learn how to calculate and interpret ROE, a measure of how well a company uses equity to generate income. Find out how ROE varies across industries, how it relates to sustainable growth rate, and what factors affect its value.
Cost of equity is the rate of return required on an equity investment by an investor or a company. Learn how to calculate it using two models: dividend growth model and capital asset pricing model (CAPM).
Learn how to calculate and interpret ROI, a key financial ratio that measures the gain/loss from an investment in relation to the initial investment. Find out the advantages, disadvantages, and variations of using ROI for different situations and applications.
Return on Assets Formula. To calculate ROA, use the general formula provided below: Note: Professional accountants will calculate ROA using a more complex formula known as the 'DuPont Disaggregation.' Return on Assets Formula Example . Say that a company has $10,000 in total assets and generates $2,000 in net income.
Learn how to calculate and interpret return on capital (ROC), a ratio that measures how well a company turns capital into profits. Compare ROC with other metrics like ROCE, ROE, and WACC.
Learn how to calculate the internal rate of return (IRR) for a project or investment, and how it relates to the net present value (NPV). The IRR is the discount rate that makes NPV equal to zero, and it indicates the project's profitability and breakeven point.
ROIC is a profitability ratio that measures the return on capital invested by bondholders and stockholders. Learn how to calculate ROIC, why it matters, and how it relates to a company's moat.
The DuPont identity breaks down return on equity (ROE) into its components -- profit margin, total asset turnover, and financial leverage -- so that each one can be examined in depth. Learn how to use the DuPont identity to analyze a company's profitability, efficiency and debt structure.
Learn how to calculate the debt to equity ratio (D/E), a measure of leverage and financial risk, with a simple formula. See examples of D/E ratios for different industries and how they affect investors and lenders.
Calculate the total and annualized return on your investment based on a future projected value or a past outcome. Learn how to use ROI to measure investment performance, set goals, and compare with benchmarks.