Do Stocks With Higher Profitability Earn More? – ValueWalk Premium
Profitability ROCE

Do Stocks With Higher Profitability Earn More?

Do Stocks With Higher Profitability Earn More? by Bargain Value

Profitability tells us how good a company manages its equity/assets. There are many formulas to count profitability, but they all are quite correlated with each other. Main 3 formulas are:

Return on Equity (ROE) = annual net profit / equity

Return on Assets (ROA) = annual net profit / total assets

Return on Capital Employed (ROCE) =

= annual operating profit / (total assets – current liabilities)

Capital employed is something between equity and assets. It gathers only those assets . . .

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