Do Stocks With Higher Profitability Earn More?Guest Post
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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