Category Archives: Financial Ratios

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…
Read more

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…
Read more

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.…
Read more

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.  …
Read more