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Return On Assets
The return on assets (ROA) shows the percentage of how profitable a company's assets are in generating revenue. ROA can be computed as below: :\mathrm = \frac This number tells you what the company can do with what it has, ''i.e.'' how many dollars of earnings they derive from each dollar of assets they control. It's a useful number for comparing competing companies in the same industry. The number will vary widely across different industries. Return on assets gives an indication of the capital intensity of the company, which will depend on the industry; companies that require large initial investments will generally have lower return on assets. ROAs over 5% are generally considered good. Usage Return on assets is one of the elements used in financial analysis using the Du Pont Identity. See also *Return on equity (ROE) * List of business and finance abbreviations *Rate of return on a portfolio * Return on brand (ROB) *Return on capital (ROC) *Return on investment (ROI) *Weight ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Profit (accounting)
Profit, in accounting, is an income distributed to the owner in a profitable market production process (business). Profit is a measure of profitability which is the owner's major interest in the income-formation process of market production. There are several profit measures in common use. Income formation in market production is always a balance between income generation and income distribution. The income generated is always distributed to the stakeholders of production as economic value within the review period. The profit is the share of income formation the owner is able to keep to themselves in the income distribution process. Profit is one of the major sources of economic well-being because it means incomes and opportunities to develop production. The words "income", "profit" and "earnings" are synonyms in this context. Measurement of profit There are several important profit measures in common use. Note that the words ''earnings'', ''profit'' and ''income'' ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Asset
In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset). The balance sheet of a firm records the monetaryThere are different methods of assessing the monetary value of the assets recorded on the Balance Sheet. In some cases, the ''Historical Cost'' is used; such that the value of the asset when it was bought in the past is used as the monetary value. In other instances, the present fair market value of the asset is used to determine the value shown on the balance sheet. value of the assets owned by that firm. It covers money and other valuables belonging to an individual or to a business. Assets can be grouped into two major classes: tangible assets and intangible assets. Tangible assets contain various subclasses, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Revenue
In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive revenue from interest, royalties, or other fees. This definition is based on IAS 18. "Revenue" may refer to income in general, or it may refer to the amount, in a monetary unit, earned during a period of time, as in "Last year, Company X had revenue of $42 million". Profits or net income generally imply total revenue minus total expenses in a given period. In accounting, in the balance statement, revenue is a subsection of the Equity section and revenue increases equity, it is often referred to as the "top line" due to its position on the income statement at the very top. This is to be contrasted with the "bottom line" which denotes net income (gross revenues minus total expenses). In general usage, revenue is the total amount of income b ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Capital Intensity
Capital intensity is the amount of fixed or real capital present in relation to other factors of production, especially labor. At the level of either a production process or the aggregate economy, it may be estimated by the capital to labor ratio, such as from the points along a capital/labor isoquant. Growth The use of tools and machinery makes labor more effective, so rising capital intensity (or " capital deepening") pushes up the productivity of labor. Capital intensive societies tend to have a higher standard of living over the long run. Calculations made by Robert Solow claimed that economic growth was mainly driven by technological progress (productivity growth) rather than inputs of capital and labor. However recent economic research has invalidated that theory, since Solow did not properly consider changes in both investment and labor inputs. Dale Jorgenson, of Harvard University, President of the American Economic Association in 2000, concludes that: 'Griliches and I sh ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Du Pont Identity
DuPont analysis (also known as the DuPont identity, DuPont equation, DuPont framework, DuPont model or the DuPont method) is an expression which breaks ROE (return on equity) into three parts. The name comes from the DuPont company that began using this formula in the 1920s. DuPont explosives salesman Donaldson Brown invented the formula in an internal efficiency report in 1912. Basic formula * Profitability: measured by profit margin * Asset efficiency: measured by asset turnover * Financial leverage: measured by equity multiplier : Or : Or : ROE analysis The DuPont analysis breaks down ROE (that is, the returns that investors receive from a single dollar of equity) into three distinct elements. This analysis enables the analyst to understand the source of superior (or inferior) return by comparison with companies in similar industries (or between industries). The DuPont analysis is less useful for industries such as investment banking, in which the underlying elements are ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Return On Equity
The return on equity (ROE) is a measure of the profitability of a business in relation to the equity. Because shareholder's equity can be calculated by taking all assets and subtracting all liabilities, ROE can also be thought of as a return on ''assets minus liabilities''. ROE measures how many dollars of profit are generated for each dollar of shareholder's equity. ROE is a metric of how well the company utilizes its equity to generate profits. The formula : ROE is equal to a fiscal year net income (after preferred stock dividends, before common stock dividends), divided by total equity (excluding preferred shares), expressed as a percentage. Usage ROE is especially used for comparing the performance of companies in the same industry. As with return on capital, a ROE is a measure of management's ability to generate income from the equity available to it. ROEs of 15–20% are generally considered good. ROE is also a factor in stock valuation, in association with other fi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
List Of Business And Finance Abbreviations
This is a list of abbreviations used in a business of financial context. 0-9 *1H – First half of the year *24/7 – 24 hours a day, seven days a week *80/20 – According to the Pareto principle, for many events, roughly 80% of the effects come from 20% of the causes A *ADR – Alternative dispute resolution *AI – Artificial Intelligence *AM – Account manager *AOP – Adjusted Operating Profit *AOP – Annual Operating Plan *AP – Accounts payable *AR – Accounts receivable *ARPU – Average revenue per user *ASP – Average selling price *agcy. – Agency *agt. – Agent *asst. – Assistant *a/c. – Account B *BAU – Business As Usual *BEP – Break Even Point *BIC – Bank Identifier Code *bldg. – Building *BLS – Balance sheet *BMC – Business Model Canvas *BOM – Bill of materials *BPO – Business Process Outsourcing *BPR – Brief Project Report *BPV – Bank Payment Voucher *BRD – Business Requirements Document *BRU – Business Recovery Uni ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Rate Of Return On A Portfolio
The rate of return on a portfolio is the ratio of the net gain or loss (which is the total of net income, foreign currency appreciation and capital gain, whether realized or not) which a portfolio generates, relative to the size of the portfolio. It is measured over a period of time, commonly a year. Calculation The rate of return on a portfolio can be calculated either directly or indirectly, depending the particular type of data available. Direct historical measurement Direct historical measurement of the rate of return on a portfolio applies one of several alternative methods, such as for example the time-weighted return or the modified Dietz method.*Bruce J. Feibel. ''Investment Performance Measurement''. New York: Wiley, 2003. It requires knowledge of the value of the portfolio at the start and end of the period of time under measurement, together with the external flows of value into and out of the portfolio at various times within the time period. For the time-weighted met ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Return On Brand
The return on brand (ROB) is an indicator used to measure brand management performance. It is an indicator of the effectiveness of brand use in terms of generating net income. In fact, it is a special case of return on assets (ROA). ROB is calculated as the ratio of net income to brand value: : \mathrm = \frac Usage Return on brand can be used in multi-criteria models for assessing the effectiveness of branding, as well as intellectual capital (since the brand is a component of relational capital). It is believed that if the brand value of the company increases, its net profit should also increase, otherwise the value of ROB will decrease, which indicates a decrease in the effectiveness of brand management in terms of creating net profit. At the same time, if the brand value falls, and this does not lead to a decrease in the net profit of the enterprise, the ROB value increases, which indicates a relative increase in the brand management efficiency. The change in brand value ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Return On Capital
Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders.Fernandes, Nuno. Finance for Executives: A Practical Guide for Managers. NPV Publishing, 2014, p. 36. It indicates how effective a company is at turning capital into profits. The ratio is calculated by dividing the after tax operating income ( NOPAT) by the average book-value of the invested capital (IC). Return on invested capital formula : There are three main components of this measurement that are worth noting: * While ratios such as return on equity and return on assets use net income as the numerator, ROIC uses net operating income after tax (NOPAT), which means that after-tax expenses (income) from financing activities are added back to (deducted from) net income. * While many financial computati ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Return On Investment
Return on investment (ROI) or return on costs (ROC) is a ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favourably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments.Return On Investment – ROI , Investopedia as accessed 8 January 2013 In economic terms, it is one way of relating profits to capital invested. Purpose In business, the pur ...[...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Weighted Average Return On Assets
The weighted average return on assets, or WARA, is the collective rates of return on the various types of tangible and intangible assets of a company. The presumption of a WARA is that each class of a company's asset base (such as manufacturing equipment, contracts, software, brand names, etc.) carries its own rate of return, each unique to the asset's underlying operational risk as well as its ability to attain debt and equity. Tangible assets, generally speaking, carry a lower rate of return due to two factors: * Debt financing—tangible assets can be provided as collateral in attracting debt capital, which typically require a lower rate of return than equity capital * Stability of earnings—tangible assets tend to provide more certainty in expected earnings, which reduces risk to the financier of the asset Intangible assets, in contrast, carry a higher rate of return due to the same factors above. Averaging these rates of returns, as a percentage of the total asset base, pr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |