Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications

What is ROE?

 What is ROE?

Return On Equity (RoE) is a financial ratio that calculates the amount of net profit earned as a percentage of shareholders' equity .It reveals how efficiently a company has used shareholders' money .

RoE is computed as net profit divided by networth (i.e. equity + reserves + retained earnings)

2. How does RoE reflect corporate performance?

When a company has a low RoE, it means that the company has not used the capital invested by shareholders efficiently . It reflects that the company is not in a position to provide inves tors with substantial re turns. Analysts feel if a company's RoE is less than 12-14%, it is not satisfactory . Companies with RoE of 20% and above are considered good investments.

Analysts caution inves tors not to consider companies that have a negative RoE, especially in this volatile environ ment. They feel it is bet ter to avoid these companies as they often are ridden with problems of excessive debt.

3. What is the use of RoE in stock market valuations?

RoE directly impacts stock valuations -higher the ROE, higher the intrinsic value of a company. That explains why a lot of the companies with high RoEs have higher valuations.

4. Why is RoE relevant now?

Indian companies' return on equity has halved from its 2005 highs to 12.3%, said Credit Suisse. Credit Suisse said the slide in RoE has been broad-based and not specific to sectors such as energy and materials on account of the fall in commodity prices. RoE was one of the key parameters used by analysts to highlight the Indian corporate growth story between 2003 and 2007, which was may be showing signs of improving. Indian companies' RoE hit a peak of 23.4% in 2005. Although RoEs have fallen in all major markets over the past few years on weaker global growth, a contraction in India has been among the most severe.

5. What is an alternative to ROE?

Return on Capital Employed (RoCE) is an alternative profit ability performance measure. It is a financial ratio which measures a company's overall profitability (both of debt and equity holders) and indicates the efficiency with which its capital (again both equity and debt) is employed. A company with high debt should be analysed using RoCE whereas a company with little debt should be analysed using ROE

-----------------------------------------------
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

-----------------------------------------------

0 comments:



Post a Comment


Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications

Popular Posts

Mutual Fund Application Forms Download Any Applications
Invest in Tax Saving Mutual Funds Invest Online
Infrastructure Bond Application Forms Download Applications