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The geometric average return is equivalent to the cumulative return over the whole n periods, converted into a rate of return per period. Where the individual sub-periods are each equal (say, 1 year), and there is reinvestment of returns, the annualized cumulative return is the geometric average rate of return.
The phrase return on average assets (ROAA) is also used, to emphasize that average assets are used in the above formula. [2] This number tells you what the company can do with what it has, i.e. how many dollars of earnings they derive from each dollar of assets they control. It's a useful number for comparing competing companies in the same ...
Return on equity (ROE) and return on assets (ROA) determine how efficient a company can be at generating profits. Both formulas that can help investors determine how good a company is at turning a ...
Bacon (2002) proposed geometric excess return, as part of a geometric attribution, as a solution to this problem, and suggested that geometric attributions are preferable because they are compoundable, they are convertible among currencies, and they are proportionate (between different asset bases from period to period). [13]
Investors use the return on assets ratio formula to evaluate a company. The greater a return, the higher valuation investors are likely to provide.
Continue reading ->The post How to Calculate Return on Assets appeared first on SmartAsset Blog. The strength of a company isn’t just about how much money it makes. Investors also want to know ...
The geometric mean of a data set is less than the data set's arithmetic mean unless all members of the data set are equal, in which case the geometric and arithmetic means are equal. This allows the definition of the arithmetic-geometric mean, an intersection of the two which always lies in between.
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.. The presumption of a WARA is that each class of a company's asset base (such as manufacturing equipment, contracts, software, brand names, etc.) carries its own rate of return, each unique to the asset's underlying operational risk as well as ...