Yet, life moves on and we have to put our money to work for us. Every investor develops his or her own style of investing and this is what makes investing interesting and a continuous learning experience. If at all there was a simple and straight way to investing, we all would have followed that path to identify multi-baggers. However, one thing for sure that all investors would check for, irrespective of the investing style they adopt, is ‘return on equity’ ratio (ROE) or ‘return on net worth’ (RONW).
Both the ratios indicate returns generated over the owner’s capital employed or shareholder’s fund. Shareholder’s fund is defined as equity capital invested plus all reserve and surplus of the company. RONW measures profitability earned on the shareholder’s funds and is used as a benchmark for comparing one company with another and the company’s performance over the years. Change in RONW can be caused by a combination of any of the factors like change in the profit margins, capital turnover, financial cost ratio, financial structure ratio and lastly due to change in tax structure.
Diese Geschichte stammt aus der May 10, 2021-Ausgabe von Dalal Street Investment Journal.
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Diese Geschichte stammt aus der May 10, 2021-Ausgabe von Dalal Street Investment Journal.
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