Dissecting RoE

Discussion in 'School Of Stock Market' started by Vidhi Khanna, Jun 14, 2015.

  1. Vidhi Khanna

    Vidhi Khanna Active Member Staff Member

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    There is almost a unanimous agreement in investment community that RoE is an important indicator of health of a company, High sustainable ROE implies sustainable competitive advantages and hence investment attractiveness of the company

    Sustainable is a key word here so always execute ROE analysis for at least 5 years if not 10 years to arrive at a conclusion

    https://www.tankrich.com/2015-10-dissecting-roe/
     
  2. saurabh kurichh

    saurabh kurichh New Member

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  3. adi16

    adi16 Member

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    You should also look into RoCE because ROE excludes the amount of debt with which the company operates while ROCE takes this into account.
     
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  4. darth

    darth Active Member

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    It's about dissecting the RoE using the Dupont Analysis.... Which is far superior to simply looking at the RoE and considers debt too as one of its vectors.
     
  5. priya agrawal

    priya agrawal Member

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    Yes definitely ROE is a good factor to judge the performance of company.It helps to determine how competitive a company is and how attractive it is from investment point of view.