Capsim Success Measures
RETURN
ON
EQUITY
(ROE)
Formula
Description:
What Does
Return On
Equity Tell
You?
Return on equity (ROE) is net profit divided by total equity.
Return on equity tells you how effectively a company is using the dollars invested in it by stockholders. ROE is the most often quoted single statistic when describing a firm 's performance. It is also one of the statistics considered to be most useful by stockholders.
RETURN
ON
ASSETS
(ROA)
Formula
Description:
You determine return on assets by dividing net profit by your total asset base. What Does
Return On
Assets Tell
You?
Return on assets is an efficiency ratio. It compares the profits generated with the asset base required. It answers the question, how hard
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Asset turnover (T/O) demonstrates how effective the asset base is in generating top line revenue. High T/O values have implications in terms of plant structure, level of backward integration, and aggressiveness of pricing policy.
CUMULATIVE
PROFITS
Formula
Cumulative Profits is the total
Description
of all year 's Net Profit.
:
What Does
How Profitable the company
Cumulative
has been over time
Profits Tell
You?
MARKET
SHARE
BY
DOLLAR
VOLUME
Formula
Description:
What Does
Market Share in Dollars Tell
You?
Percentage share of industry sales dollars. What portion of total industry sales a company has captured.
STOCK
PRICE
Formula
Stock Price is a function of
Description
book value, EPS, and
:
average dividend.
What Does
This is an indication of the
Stock Price value independent
Tell You? investors believe you shares possess.
MARKET
CAP
Formula
Description:
Market Capitalization is calculated by determining the weighted average number of shares for a given period and then multiplying that number by the closing Stock Price.
What Does Market
Cap Tell You?
The recognition that Market Cap is a function of both share price and share volume is significant for this number tells you more about the real value of the company than just the share price alone. In the extreme a corporation could be trading at a huge P/E multiple but if it only had relatively few shares outstanding then the company would not be
Return on Equity measures how much net income is generated per dollar invested in the company by stockholders and investors. Again we see the same downward trend. It went down by 6% from 18% in 2011 to 12% in 2012.
I. Rate of Return on Total Assets: Measures the company’s profitability relative to total assets. A percentage increment for Company G, from 12.30% to 13.68% (2011-12) keeps them above industry benchmarks (8.60% and 12.30%). Rate of Return on Total Assets represents strength for Company G.
The profitability ratio shows the ability for a company to generate profits. Ratios that are used calculating profitability of a company are return on assets and return on equity. The return on assets calculates the ability of a company to effectively use assets to generate income, the percentages per quarter in year one are; 76%, 22%, 34%, 37%. This shows profit during each quarter. In years two, three, and four the percentages are; 68%, 54%, 49%, 38%. These ratios show a slight decline but still a solid profit. The return on equity shows the amount of money earned per dollar investing into the company by shareholders. By quarter, year one return on equity is .81 .61 .28 .29, years two, three and four are all .32. These numbers show an above average return, the average return in the United States is between .10-.15, and over .20 is considered above average (Kennon, 2011.)
Return on equity measures a company’s profitability by calculating how much profit a company generates with the money shareholders have invested. It is important to consider ROE and not just net income in dollar term because it helps for making comparisons among different investment amounts.
Return on Assets shows the Company’s ability to generate a profit based on assets and equity. In 2009, the Company’s profit margin was 3.07% and in 2011 it had fallen to 1.91%.
They way the investors would benefit from our ratio tables, is by looking at and comparing Profitability ratios by comparing Profit margins, return on equity or by comparing solvency ratios such as debt ratio and equity ratios with the other companies being presented in our research analysis. For more detailed information they can check the balance sheets and income statements that are being portrayed in the report and look at the progress of the companies within the last four years. Therefore, helping make their decisions easier and faster.
A review of a company’s profitability lets investors or managers know how efficiently a company is operating. There are three key ratios to review. The profit margin, return on equity and return on assets. The profit margin is the net income divided by sales. The higher the profit margins the better. The return on equity is net income divided by total equity (Cornett, Adair & Nofsinger, 2009).. This can help to determine the amount of financial leverage the company is using. The return on assets is the net income divided by total assets. This can also help determine the financial leverage the company is using in regards to its assets (Cornett, Adair & Nofsinger,
The return on equity ratio measures how well a company is using its owner 's investments to generate after tax profits. Investors like to see a high return on equity since it indicates the company is using the owner 's investments efficiently to generate after tax profits, (Schermehorn, J, et al, 2004). Different industries requires different percentage of return on equity as some industries need to generate high return on the basis that less capital is invested, (Palepu et al. 2010). Return on equity has increased from 3.39% in 2011 to 5.46% in 2012 this is consistent with the growth strategy and cost efficiency strategy. However the strategic cost played a significant part in the lower net income of 2011 for example even though the total equity increased by 4.70% it is not as large as the 68.44% increase in the profit after tax. Return on equity has three parts; operation efficiency, assets used efficiency and equity multiplier.
such as internal rate of return (IRR), net present value (NPV), return on investment (ROI), cost-benefit analysis, Cost Benefit Ratio (CBR), Payback period
Return on Assets (ROA): “Return on assets is the ratio of annual net income to average total assets of a business during a financial year.” (Irfanullah, 2013) In short, it measures a company’s
Capsim is a business simulation that allows users to learn how to apply business strategies through a simulation. Capsim provides four practice rounds and four competitive rounds. After concluding the fourth practice round of Capsim, a financial analysis must be done individually. The purpose of this initial financial analysis is to understand if the company is healthy. After my analysis, I concluded that the company is not in a healthy state. The way I determined this was through the following three ratios: Return on Total Assets (ROA), Return on Stockholders’ Equity (ROE) and Debt-to-Equity Ratio.
The ratios returns on investment (ROI) and return on equity (ROE) are two of the most popular measure of profitability of a company and, along
Through indicating the profit margin, return on assets and return on equity to measure sales, assets and other factors, shareholders also can know the global profit performance of the firm and indicate that how the condition of company is.
One of the most important profitability metrics is return on equity. Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity. It’s what the shareholders “own”. A business that has a high return on equity is more likely to be one that is capable of generating cash internally. For the most part, the higher a company’s return on equity compared to its industry, the better.