The document discusses various profitability ratios used to analyze a company's financial performance, including:
1. Gross profit margin - Measures profitability after direct costs are subtracted from revenue.
2. Operating profit margin - Accounts for indirect costs in addition to direct costs.
3. Net profit margin - Shows profitability after all expenses including interest and taxes.
4. Return on assets - Measures how efficiently a company uses its assets to generate earnings.
5. Return on equity - Assesses how efficiently a company generates profit relative to shareholders' equity.
Liquidity Ratios
This type of ratio helps in measuring the ability of a company to take care of its short-term debt obligations. A higher liquidity ratio represents that the company is highly rich in cash.
The types of liquidity ratios are: –
Current Ratio or Working Capital Ratio
Quick Ratio or Liquidity Ratio or Acid Test Ratio
Absolute Liquid Ratio or Cash Ratio
Stock to Working Capital Ratio
Current Ratio: The current ratio is the ratio between the current assets and current liabilities of a company. The current ratio is used to indicate the liquidity of an organization in being able to meet its debt obligations in the upcoming twelve months. A higher current ratio will indicate that the organization is highly capable of repaying its short-term debt obligations.
Current Ratio = Current Assets / Current Liabilities
Current Assets:
Current Assets means cash and those assets which can be converted into cash within one year in ordinary course of business.
Current Liabilities:
Current Liabilities are those which are to be paid by the firm in one year.
Quick Ratio or Liquidity Ratio or Acid Test Ratio :
The quick ratio is used to ascertain information pertaining to the capability of a company in paying off its current liabilities on an immediate basis.
The formula used for the calculation of a quick ratio is-
Quick Ratio = (Cash and Cash Equivalents + Marketable Securities + Accounts Receivables) / Current Liabilities
. Absolute Liquid Ratio or Cash Ratio:
The cash ratio measures a company’s ability to pay off short-term liabilities with cash and cash equivalents:
Cash ratio = Cash and Cash equivalents / Current Liabilities
Stock to Working Capital Ratio:
It is calculated by dividing the value of stock (or inventories such as raw materials, work in progress, finished goods, stores and packing materials) by the Working capital.
1.Distinguish between the direct and indirect labor cost
2. Understand the various facets of labor cost control
3. Understand the concepts like labor turnover, time keeping, time booking and idle and overtime
4. Know the various methods of remuneration including incentive plans
5. Understand the pay roll accounting and disbursement of wages.
Liquidity Ratios
This type of ratio helps in measuring the ability of a company to take care of its short-term debt obligations. A higher liquidity ratio represents that the company is highly rich in cash.
The types of liquidity ratios are: –
Current Ratio or Working Capital Ratio
Quick Ratio or Liquidity Ratio or Acid Test Ratio
Absolute Liquid Ratio or Cash Ratio
Stock to Working Capital Ratio
Current Ratio: The current ratio is the ratio between the current assets and current liabilities of a company. The current ratio is used to indicate the liquidity of an organization in being able to meet its debt obligations in the upcoming twelve months. A higher current ratio will indicate that the organization is highly capable of repaying its short-term debt obligations.
Current Ratio = Current Assets / Current Liabilities
Current Assets:
Current Assets means cash and those assets which can be converted into cash within one year in ordinary course of business.
Current Liabilities:
Current Liabilities are those which are to be paid by the firm in one year.
Quick Ratio or Liquidity Ratio or Acid Test Ratio :
The quick ratio is used to ascertain information pertaining to the capability of a company in paying off its current liabilities on an immediate basis.
The formula used for the calculation of a quick ratio is-
Quick Ratio = (Cash and Cash Equivalents + Marketable Securities + Accounts Receivables) / Current Liabilities
. Absolute Liquid Ratio or Cash Ratio:
The cash ratio measures a company’s ability to pay off short-term liabilities with cash and cash equivalents:
Cash ratio = Cash and Cash equivalents / Current Liabilities
Stock to Working Capital Ratio:
It is calculated by dividing the value of stock (or inventories such as raw materials, work in progress, finished goods, stores and packing materials) by the Working capital.
1.Distinguish between the direct and indirect labor cost
2. Understand the various facets of labor cost control
3. Understand the concepts like labor turnover, time keeping, time booking and idle and overtime
4. Know the various methods of remuneration including incentive plans
5. Understand the pay roll accounting and disbursement of wages.
To enjoy overdraft facilities, customers shall fulfill the following specific requirements, in addition to the general eligibility criteria as indicated in the procedure.
• The applicant must not be in blacklist record with CBE or other banks.
• In case of cooperatives or unions, the general assembly or board committee shall assign a delegated person who shall request micro loan on their behalf and identify the specific phone number a micro loan will be processed through. The same shall be communicated to the bank in writing.
• In case of Share Company or Private Limited Company, major shareholders should sign personal guarantee.
• The Bank may provide overdraft facility on clean basis or against other collaterals for its prominent customers.
• In order to entertain clean base overdraft facility, the customer’s Risk Grade shall be 1, 2, or 3.
• The outstanding balance of the overdraft facility must be within the approved limit at the time of the processing of the renewal request.
tele birr Endekise (Overdraft Service)
It allows individual customers and organizations to activate and use Credit service when their balance is insufficient.
Eligibility Criteria for telebirr endekise service
• Customer credit scoring will be calculated based on six-month telebirr transactions and telecom usage.
o To calculate credit scores, the following telebirr transactions are used:
o Self (for own & others)-airtime & packages
purchase.
o Airtime recharge and package purchase via
agent,
o Buy goods/service,
o Self (for own & others) – Pay bill,
o Pay bill via agent
o Self-Utility payment (for own & others)
o Utility payment via agent
o Bulk disbursement (salary, SafetyNet …)
o Receive Remittance
o Ticket purchase
o Fundraising payment
o Micro Saving service
o Telecom usage like Voice, Data and SMS
• To be eligible, customers must use at least one transaction of telebirr service on top of telecom service usage.
• Six months’ transaction or usage information will be considered for eligibility.
• A customer can borrow any amount between the minimum and maximum amount allowed.
Activation requirement for telebirr Endekise
• 18-year-old and above
• Have an Ethio telecom active SIM card
• Active user of telebirr and Ethio telecom products such as Data/Voice/SMS
• At least being telebirr customer for 3 months
• You can use USSD (*127#) or telebirr app to register
1. The Agreement
•
o This Agreement sets out the complete Terms and Conditions (hereinafter called "These Terms and Conditions") which shall be applicable to telebirr endekise Service.
o These terms and conditions, as well as any related amendments or changes, will become effective once the credit customer has read and accepted them (by clicking on the option to accept).
2. Definitions
• In these Terms and Conditions, the following words and expressions bear the following meanings:
• “telebirr endekise Service” allows customers to activate and use Credit service when their balance is insufficient.
• “Individ
Financial ratios are indispensable to form a clear financial insight in the position of a company. They show the financial health and the potential of the company.
Mel feller looks at creating a more profitable businessMel Feller
Mel Feller Looks at Creating a More Profitable Business
Making a profit is the most important - some might say the only - objective of a business. Profit measures success. It can be defined simply: Revenues - Expenses = Profit. Therefore, to increase profits you must raise revenues, lower expenses, or both. To make improvements you must know what is really going on financially at all times. You have to watch every financial event without any kind of optimistic filter.
This article is a series of questions with comments to help you analyze your profits, their sufficiency and trend, the contribution of each of your product lines or services to them, and to help you determine if you have the kind of record system you need. The questions and comments are not meant to be definitive presentations on the subjects.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
4. • 1. Gross profit margin (direct costs)
• Gross profit margin is calculated by looking at revenue minus the cost of goods
required for production.
• 2. Operating profit margin (direct and indirect costs) also (cost of goods sold
and cost of sales)
• Operating profit margin is calculated by taking the gross profit figure and then
subtracting all the indirect costs involved in production and delivery of goods,
such as salaries; marketing and advertising costs; and general administrative
expenses. Often referred as EBIT/sales
• 3. Net profit margin (only cost of goods sold)
• the profit per dollar of sales
• The difference between Net Profit Margin and Operating Profit Margin is that the
former takes only cost of goods sold into account, but the latter takes both cost of
goods sold and cost of sales into account.
• Operating profit margin shows us before interest and taxes how the company is
doing, net profit margin shows after interest, taxes, amortization, and
depreciation
5. Gross profit definition
• Gross profit, the first level of profitability, tells analysts how good a
company is at creating a product or providing a service compared to
its competitors.
6. 1. Gross profit margin
Gross profit/(Revenue-Cost of goods sold) x 100
Revenue/Net revenue/Sales/Net sales
• Is a financial metric used to assess a company's financial health and business
model by revealing the proportion of money left over from revenues after
accounting for the cost of goods sold (COGS).
• Without an adequate gross margin, a company is unable to pay for its operating
expenses. In general, a company's gross profit margin should be stable unless
there have been changes to the company's business model.
• Gross margin changes may also be driven by industry changes in regulation or
even changes in a company's pricing strategy.
• More efficient or higher premium companies see higher profit margins.
6
7. Gross profit margin: example
• Suppose ABC company earns $20 million in revenue from producing
widgets and incurs $10 million in COGS-related expenses. ABC's gross
profit is $20 million minus $10 million. The gross margin is calculated
as gross profit divided by $20 million, which is 0.50, or 50%. This
means ABC earns 50 cents on the dollar in gross margin.
8. Operating income definition
• “Operating income” refers to the profit that a company retains after
removing operating expenses (such as cost of goods sold and wages)
and depreciation.
• “Net sales” refers to the total value of sales minus the value of
returned goods, allowances for damaged and missing goods, and
discount sales.
9. 2. Operating profit margin
Operating profit/EBIT x 100
Revenue/Net revenue/Sales/Net sales
• Operating margin is a measurement of what proportion of a company's revenue is left over after paying for
variable costs of production such as wages, raw materials, etc. It can be calculated by dividing a company’s
operating income (also known as "operating profit") during a given period by its net sales during the same
period.
• Operating margin gives analysts an idea of how much a company makes (before interest and taxes) on each
dollar of sales. Generally speaking, the higher a company’s operating margin is, the better off the company
is. If a company's margin is increasing, it is earning more per dollar of sales.
• A company’s operating margin often determines how well the company can satisfy creditors and create
value for shareholders by generating operating cash flow. A healthy operating margin is also required for a
company to be able to pay for its fixed costs, such as interest on debt, so a high margin means that a
company has less financial risk than a company with a low margin.
10. Operating profit margin: example
• Suppose that Company A earns $12 million in a year with $9 million of cost
of goods sold and $500,000 in depreciation. Also suppose that Company A
makes $20 million in sales during the same year, with $1 million worth of
returns, $2 million in damaged and missing goods and $1 million in
discounts. Company A’s operating margin for the year is then:
• ($12M - $9M - $0.5M) / ($20M - $1M - $2M - $1M) = $2.5M / $16M =
0.1563 = 15.63%
• With an operating margin of 15.63%, Company A is earning about $0.16
(before interest and taxes) for every dollar of sales.
11. Operating profit margin: usage
• Shows how profitable a company is
• A savvy investor may often track a company’s operating margin over time
to determine if the company’s margin has historically been consistent or if
growth in its operating margin is stable.
• It can be used to analyse a particular project within a company, not only
the company itself.
• However it doesn't account for the investment capital that got the
company started. It is important when considering young companies, as
they may be working to recoup initial costs, an effort that will likely not be
reflected in an operating margin.
12. Net profit: definition
• Net profit represents the number of sales dollars remaining after all
operating expenses, interest, taxes and preferred stock dividends (but
not common stock dividends) have been deducted from a company's
total revenue.
• Net profit is one of the most closely followed numbers in finance, and
it plays a large role in ratio analysis and financial statement analysis.
Shareholders look at net profit closely because it is the source of
compensation to shareholders of the company.
13. 3. Net profit margin
otherwise known as profit margin on sales
Net profit/Net income x 100
Revenue/Net revenue/Sales/Net sales
• Shows how much of each dollar collected by a company as revenue translates
into profit.
• Net margins vary from company to company, and certain ranges can be
expected in certain industries, as similar business constraints exist in each
distinct industry. Low profit margins don't necessarily equate to low profits.
13
14. Net profit margin: usage
• Net profit margin is one of the most important indicators of a business's
financial health.
• It can give a more accurate view of how profitable a business is than its
cash flow, and by tracking increases and decreases in its net profit margin,
a business can assess whether or not current practices are working.
• Additionally, because net profit margin is expressed as a percentage rather
than a dollar amount, as net profit is, it makes it possible to compare the
profitability of two or more businesses regardless of their differences in
size.
• Finally, a business can use its net profit margin to forecast profits based on
revenues.
15. Net profit margin: example
• Imagine a business has $100,000 in revenue, but it also has $20,000
in operating costs, $10,000 in COGS and $14,000 in tax liability. Its net
profits are $56,000. Profits divided by revenue equals .56 or 56%. A
56% profit margin indicates the company earns 56 cents in profit for
every dollar it collects.
16. 4. Return on Asset (ROA)
otherwise known as Return on Investment (ROI)
Net Profit/Net income x 100
Total Assets
• Indicator of how profitable a company is relative to its total assets.
• Gives an idea as to how efficient management is at using its assets to generate
earnings.
• Can vary substantially and will be highly dependent on the industry.
• The higher the ROA number, the better, because the company is earning more
money on less investment
17. Return on Asset (ROA): example
• if one company has a net income of $1 million and total assets of $5
million, its ROA is 20%; however, if another company earns the same
amount but has total assets of $10 million, it has an ROA of 10%.
• Based on this example, the first company is better at converting its
investment into profit. When you really think about it, management's
most important job is to make wise choices in allocating its resources.
18. 5. Return on Equity (ROE)
otherwise known as Return on ordinary Shareholders’ Funds (ROSF)
Net profit/Net income x 100
Total Equity
• Measures a corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested.
• Is more than a measure of profit; it's a measure of efficiency. A rising ROE
suggests that a company is increasing its ability to generate profit without
needing as much capital.
• It also indicates how well a company's management is deploying the
shareholders' capital. In other words, the higher the ROE the better. Falling ROE is
usually a problem.
19. Return on Equity: example
• Let's assume Company XYZ generated $10 million in net income last
year. If Company XYZ's shareholders' equity equaled $20 million last
year, then using the ROE formula, we can calculate Company XYZ's
ROE as:
• ROE = $10,000,000/$20,000,000 = 50%
• This means that Company XYZ generated $0.50 of profit for every $1
of shareholders' equity last year, giving the stock an ROE of 50%.
20. ROE: the DuPont formula
• breaks ROE (return on equity) into three parts
• The name comes from the DuPont Corporation that started using this
formula in the 1920s. DuPont salesman Donaldson Brown invented
this formula in an internal efficiency report in 1912