Articles of category "Return On Investment"

A return on equity (ROE) helps investors determine if a company is a lean, mean profit machine or an inefficient clunker. Firms that do a good job of milking profit from their operations typically have a competitive advantage - a feature that normally translates into superior returns for investors. The relationship between a company's profit and an investor's return makes the ROE a particularly valuable metric to examine. By measuring how much earnings a company can generate from assets, the ROE offers a gauge of profit-generating efficiency. To find companies with a competitive advantage, investors can use five-year averages of the ROEs of companies within the same industry.