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Return on capital. Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders. [1] It indicates how effective a company is at ...
e. A financial ratio or accounting ratio states the relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers ...
This means if reinvested, earning 1% return every month, the return over 12 months would compound to give a return of 12.7%. As another example, a two-year return of 10% converts to an annualized rate of return of 4.88% = ((1+0.1) (12/24) − 1), assuming reinvestment at the end of the first year. In other words, the geometric average return ...
Return on investment (ROI) or return on costs (ROC) is the ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favourably to its cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or ...
Return on net assets. The return on net assets (RONA) is a measure of financial performance of a company which takes the use of assets into account. [1][2] Higher RONA means that the company is using its assets and working capital efficiently and effectively. [3] RONA is used by investors to determine how well management is utilizing assets.
Rate of return on a portfolio. The rate of return on a portfolio is the ratio of the net gain or loss (which is the total of net income, foreign currency appreciation and capital gain, whether realized or not) which a portfolio generates, relative to the size of the portfolio. It is measured over a period of time, commonly a year.
The return on equity (ROE) is a measure of the profitability of a business in relation to its equity; [1] where: . ROE = Net Income / Average Shareholders' Equity [1] Thus, ROE is equal to a fiscal year's net income (after preferred stock dividends, before common stock dividends), divided by total equity (excluding preferred shares), expressed as a percentage.
For instance, an asset that matures and pays $1 in one year is worth less than $1 today. The size of the discount is based on an opportunity cost of capital and it is expressed as a percentage or discount rate. In finance theory, the amount of the opportunity cost is based on a relation between the risk and return of some sort of investment.