## How To Calculate Compound Interest

How To Calculate Compound Interest   We prefer to think of compound interest as a reverse credit card. We all know the problem with credit card debt; the interest charged makes it difficult to pay off the original, or principal, debt. Well the benefit of compound interest is that it can help you make…

## Fundamental Analysis vs Technical Analysis

Technical analysis and fundamental analysis are the two main approaches to valuating stocks in an effort to determine how prices might move. These approaches are complete separate schools of thought, and the same as other disciplines studied in our society, the proponents of each are at odds with one another. Ideally, in my opinion, deploying…

## Return On Capital Employed

Our next profitability ratio, return on capital employed, or RoCE indicates the efficiency and effectiveness of a company’s capital investments. Return on Capital Employed     Return on capital employed should always be higher than the rate at which the company borrows, it should earn more than the cost of funds it applies in the business….

## Return On Assets Formula

The return on assets formula, or RoA measures the efficiency of assets used in a business to generate profits. In simple terms, the return on assets formula will tell you what a company can do, with what its got. It is the most widely used profitability ratio when comparing companies in the same industry.  …

## Return On Equity Formula

The return on equity formula is the  most common profitability ratios used by equity shareholders to judge the effectiveness of their funds invested in a firm. The return on equity formula is a key formula when determining  how well a company can use shareholder money to grow the company. A company with a low return on equity…

## Profitability Ratios- Analyzing An Income Statement

Profitability reflects the final result of a company’s business operations. Profitability ratios are also called income statement ratios since most of the items used in their calculations are picked up from the income statement. Profit margin ratios and rate of return ratios are the most commonly used profitability ratios. A comparison of profitability ratios with other competitors…

## Receivable Turnover Ratio

The receivable turnover ratio is generally used by banks and creditors. Receivables are current assets which are expected to be converted into cash during the next business cycle. Receivable turnover ratio measures the effectiveness of company’s receivable collection policy. In other words, it indicates how many times the receivables are converted into cash in a…

## Total Asset Turnover Ratio

Asset ratios measure the efficiency by which a company is using their assets. These include fixed assets, inventory and receivables. Our first ratio is the total asset turnover ratio.   Asset Turnover Ratio   The total asset turnover ratio is generally applied by management to analyze the company’s performance over multiple periods. They serve as…

## Fixed Asset Turnover Ratio

Similar to the total asset turnover ratio, this ratio measures the efficiency with which the fixed assets of a company are employed, how well the fixed assets are utilized to generate revenue. In other words, it measures sales per dollar of investment in fixed assets. Analysts prefer this measure of effectiveness since fixed assets are…

## Income Statement Example – Analyzing Elements

Income Statement Example – Analyzing Elements Of An Income Statement   To the diligent investor, income statements analysis provides important insight into how effectively management is controlling expenses. Ratios are used to make rate comparisons of elements and data recorded on the statement. In our previous article about the format of an income statement,…