ROE Band

30 thg 12, 2024

ROE Band shows the return on net profit from shareholders' equity and the formula for decomposition
ROE = ROA x CSL x CEL

ROE Band consists of 5 parts:
1. ROE (TTM) is the 12-month ROE calculation in "green"
2. Return on Equity (ROE) is the current quarterly net profit / the average of the beginning and ending periods of shareholders' equity in "yellow"
3. Return on Assets (ROA) is the current quarterly NOPAT (net profit before tax) / the average of the beginning and ending periods of total assets in "blue"
4. Capital structure leverage (CSL) is a financial measure that compares a company's debt to its total capital. It is calculated by taking the average of the beginning and ending periods of total assets / the average of the beginning and ending periods of shareholders' equity. The higher the CSL, the more deb, in. "red"
5. Common earnings leverage (CEL) is the proportion of net profit and NOPAT (net profit before tax), where a lower CEL means more tax, in "orange"

The "😱" emoji represents the value if it increases by more than or decreases by less than 20%, e.g.
- ROE(TTM), ROE, ROA, CEL is decreasing
- CSL is increasing

The "🔥" emoji represents the value if it increases by more than or decreases, e.g.
- ROE(TTM), ROE, ROA, CEL is increasing
- CSL is decreasing

1 thg 1

Phát hành các Ghi chú

Add more ROIC line
ROIC is is a calculation used to determine how well a company allocates its capital to profitable projects or investments by current quarterly NOPAT / the average of the beginning and ending periods of long term debt + shareholders' equity - cash in "purple"

11 thg 2

Phát hành các Ghi chú

- Remove plot of ROIC
- Add plot of GROWTH and Payback Period
✏️ "GROWTH" is calculated as ROE * (1 - Dividend Payout Ratio) considering whether the company chooses to expand its business from retained earnings or pay dividends to shareholders.
✏️ "Payback Period" is calculated as 1 / GROWTH which means the number of years it will take the company to get back its investment if investors invest (not the trading price in the stock market but the actual business operations).