return on assets
TRANSCRIPT
ExxonMobil - Ratios overview
1 Exxon had better return on assets (6.75 percent) and return on equity (14.57 percent) ratios (Mobil’s were
3.95 percent and 9.01 percent correspondingly)
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ISO 9000 - Reasons for use
1 showed that certified organizations achieved superior return on assets
compared to otherwise similar organizations without certification
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Rate of return
1 ROI is an abbrevation of return on investment, i.e. return per dollar
invested. It is a measure of investment performance, as opposed to size (c.f. return on equity, return
on assets, return on capital employed).
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Rate of return - Uses
1 Ratios typically used by financial analysts to compare a company’s
performance over time or compare performance between companies
include return on investment (ROI), return on equity, and return on
assets.
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Organizational performance
1 performance (profits, return on assets, return on investment, etc.); (b) product
market performance (sales, market share, etc.); and (c) shareholder return
(total shareholder return, economic value added, etc.).Richard et al. (2009):
Measuring Organizational Performance: Towards Methodological Best Practice.
Journal of Management. The term Organizational effectiveness is broader.
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International Finance Corporation - Financial performance
1 The IFC's return on assets|return on average assets (GAAP basis)
decreased from 3.1% in 2010 to 2.4% in 2011
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Financial analysis - Method
1 :Net income / total assets = return on
assets (ROA)
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ISO 9002 - Reasons for use
1 showed that certified organizations achieved superior return on
assetshttp://www.bsi-emea.com/Quality/CaseStudies/Interstate.pdf compared to otherwise similar
organizations without certification
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Private equity - Leveraged buyout
1 This kind of financing structure leverage benefits an LBO's financial sponsor in two ways: (1) the investor itself only needs to provide a fraction of the capital for the acquisition, and (2) the returns to the investor will be enhanced (as long as the return on
assets exceeds the cost of the debt).Ulf Axelson, Tim Jenkinson, Per
Strömberg, and Michael Shttps://store.theartofservice.com/the-return-on-assets-toolkit.html
Leverage (finance) - Abbrevations
1 * ROA is Return on assets
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Enterprise asset management
1 By managing assets across the facility, organizations can improve
utilization and performance, reduce capital costs, reduce asset-related
operating costs, extend asset life and subsequently improve ROA (return on
assets).
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Savings and loan association - Decline of SLs
1 # Decline in the effectiveness of Regulation Q in preserving the
spread between the cost of money and the rate of return on assets,
basically stemming from inflation and the accompanying increase in market
interest rates.
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Savings and loan association - Decline of SLs
1 # Absence of an ability to vary the return on assets with increases in the
rate of interest required to be paid for deposits.
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Modigliani-Miller theorem - Proposition II
1 * r_0 is the company cost of equity capital with no leverage (unlevered cost of equity, or return on assets
with D/E = 0).
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Liquidity - The effect of market liquidity on asset values
1 Theory and empirical evidence suggests that investors require
higher return on assets with lower market liquidity to compensate them for the higher cost of trading these
assets.Yakov Amihud and Haim Mendelson, “Asset Pricing and the
Bid-Ask Spread.” Journal of Financial Economics 17, 1986
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Adjusted present value - APV formula
1 The discount rate used in the first part is the return on assets or return on equity if
unlevered.
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Adjusted present value - APV formula
1 Take Present Value (PV) of FCFs discounted by Return on Assets %
(also Return on Unlevered Equity %)
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Business corporation - Liquidations
1 Voluntary liquidations occur when the company's members decide voluntarily to wind up the affairs of the company. This may be because they believe that the
company will soon become insolvent, or it may be on economic grounds if they believe
that the purpose for which the company was formed is now at an end, or that the company is not providing an adequate
return on assets and should be broken up and sold off.
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IAS 19: Employee Benefits - Accounting for defined contribution pension plans
1 Under USGAAP (ASC715) there is the publication of an EITF Abstract in 2003 which allows categorizing the defined contribution plans with a minimum guarantee as a hybrid pension plan. Basically it requires for these
hybrid plans to project the past contributions including return (Minimum Reserve) with the Weighted average return on assets and then to actualize it with the discount rate over the
remaining period of the benefit (Future Service).
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Deflation (economics) - Causes and corresponding types
1 In more recent economic thinking, deflation is related to risk: where the risk-adjusted return on assets drops
to negative, investors and buyers will hoard currency rather than invest it, even in the most solid of securities
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Building society - 1980s and 1990s
1 This behaviour resulted in a return on assets for building societies which was at least as high as Plc banks
and, in the absence of distribution, led to rapid accumulation of reserves
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DuPont analysis - ROA and ROE ratio
1 The 'return on assets (ROA) ratio' developed by DuPont for its own use
is now used by many firms to evaluate how effectively assets are
used. It measures the combined effects of profit margins and asset
turnover.
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Return on equity - The DuPont formula
1 Randall and Gray, Gary; Applied Principles of Finance (2006)
Increased debt will make a positive contribution to a firm's ROE only if
the matching Return on assets (ROA) of that debt exceeds the interest rate
on the debt.Bodie, Kane, Markus, Investments
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Return (finance)
1 'ROI' is an abbreviation of return on investment, i.e. return per dollar
invested. It is a measure of investment performance, as opposed to size (c.f. return on equity, return
on assets, return on capital employed).
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Transfer pricing - Tested party and profit level indicator
1 Testing requires determination of what indication of profitability should be used.OECD 3.41, 26 CFR 1.482-5(b)(4). This may be net profit on the transaction, return on assets
employed, or some other measure. Reliability is generally improved for TNMM and CPM by using a range of results and multiple year data.OECD
3.43, 3.44, 26 CFR 1.482-1(e)(2).https://store.theartofservice.com/the-return-on-assets-toolkit.html
Equity Bank Group - History
1 The Bankerlisted Equity Bank among the Top 1,000 Banks in the World
with the highest return on assets in the African continent, generating a
rate of 6.84 per cent on assets employed.
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Strategy dynamics - The need for a dynamic model of strategy and performance
1 return on sales or return on assets) was neither interesting to investors – who value the prospect of increasing future cash flows – nor sustainable
over time
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Growth–share matrix - Overview
1 They depress a profitable company's return on assets ratio, used by many
investors to judge how well a company is being managed
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Finance lease - Impact on accounting
1 * Under operating lease conditions, lease obligations are not recognized;
therefore, leverage ratios are understated and ratios of return
(return on equity|ROE and return on assets|ROA) are overstated.
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Return on assets
1 The 'return on assets' ('ROA')shows percentage how Profit (accounting)|profitable a company's assets are in generating revenue.
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Return on assets
1 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
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Return on assets - Usage
1 Return on assets is one of the elements used in financial analysis using the Du Pont
Identity.
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ROSCA - Rotating or accumulating?
1 As of the end of June 2012 development agencies (including CARE, Oxfam, CRS and
PLAN) were carrying out projects reaching 1.8 million members in 23 countries, mostly in
Africa. The Savings Group Information Exchange, a project of the Bill and Melinda
Gates Foundation, provides researchers with an on-line database where indicators like savings and loans per member, country, return on assets and percent of female
members can be compared.
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Cash cow - Usage
1 Cash cows are products or services that have achieved market leader status, provide positive cash flows and a return on assets (ROA) that exceeds the market growth rate
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ROA (disambiguation) - Finance
1 *Return on assets, a financial metric
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Return on capital employed - The formula
1 It is similar to Return on assets|Return on Assets (ROA), but 1 takes into account sources of financing.
NOPAT|Net Operating Profit After Tax (NOPAT) is equal to EBIT * (1 - tax) -- the return on the capital employed
should be measured in after tax terms.
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Return on capital employed - Capital employed
1 In the denominator we have net assets or capital employed instead of
total assets (which is the case of Return on Assets). Capital Employed has many definitions. In general it is the capital investment necessary for
a business to function. It is commonly represented as asset|total assets less current liabilities (or fixed
assets plus working capital requirement).
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Just in Sequence
1 When implemented successfully, JIS improves a company's Return on assets|return on assets (ROA),
without loss in flexibility, quality or overall efficiency
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Weighted average return on assets
1 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.
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Sustainable growth rate - Relationship between revenue growth, total shareholder value creation and profitability
1 Return on Assets (ROA), Return on Sales (ROS) and Return on Equity
(ROE) do rise with increasing revenue growth up to 10 to 25% and then fall
with further increasing revenue growth rates.
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Business-agile enterprise - Overview
1 Business-agile enterprise improves financial measurements such as
margins, profitability, time to market, revenue growth, earnings per share,
ebitda (earnings before interest, taxes, depreciation amortization,
return on equity), return on assets, and return on investments.
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Business-agile enterprise - Business Technology Management Institute, Agility research
1 * Return on assets – 8% higher
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Business-agile enterprise - Agile Companies exhibit superior Business Value relative to their industry groups.IT Portfolio Management and IT Savvy – Rethinking IT Investments as a Portfolio, MIT Sloan School of
Management, Center for Information Systems Research, Summer Session, Peter Weill, June 14, 2007. Research was conducted by MIT via the SeeIT/CISR survey of 629 firms – 329 of these firms are listed
on US stock exchanges. The work was financed by the National Science Foundation grant number IIS- 0085725. Copyright ©
Massachusetts Institute of Technology, 2007. This work was created by MIT's Sloan Center for Systems Research (CISR)
1 * Profitability via sharing – firms with above average percentage of shared applications it savvy have return on
assets 30% above their industry's median
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Fixed currency - Price specie flow mechanism
1 Adjustment under a gold standard involves the flow of gold between countries resulting in Equalization payments|equalization of prices
satisfying purchasing power parity, and/or equalization of rates of return
on assets satisfying interest rate parity at the current fixed exchange
rate
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The Banker - Features and awards
1 The awards are the industry’s most widely used index of global banking, and are
internationally recognised as the definitive guide to the soundness, strength and
profitability of banks.[http://www.thebanker.com/Media/Files
/The-Banker-Media-Pack-2011 Media Pack] The Banker The banks are assessed by Tier 1 capital, with secondary rankings by assets, capital/asset ratio, real profit growth, profit
on average capital, and return on assets
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Gail Kelly - Career in Australia
1 George was seen as a possible takeover target (especially after the purchase of Colonial State Bank by the Commonwealth Bank) but Kelly
increased the bank's Profit (accounting)|profitability and
achieved much higher levels on return on assets
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State Bank of Travancore
1 Return on Equity is at 15.54.%, and the
Return on Assets stood at 0.66.%
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Bank of Mongolia - Ongoing activities
1 Profit (accounting)|Profitability of banks was high compared to most advanced countries, which have
return on assets ratio of 2.7 per cent in 2007
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