Return On Assets Ratio Analysis

2.3.4 Return on Assets

The return on assets ratio, often called the return on total assets, is a profitability ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets. In other words, the return on assets ratio or ROA measures how efficiently a company can manage its assets to produce profits during a period. Since company assets' sole purpose is to generate revenues and produce profits, this ratio helps both management and investors see how well the company can convert its investments in assets into profits.

For the analysis, the return on assets ratio measures how effectively a company can turn earns a return on its investment in assets. In other words, ROA shows how

In other words, the return on equity ratio shows how much profit each dollar of common stockholders' equity generates. ROE is also an indicator of how effective management is at using equity financing to fund operations and grow the company.

For the analysis, return on equity measures how efficiently a firm can use the money from shareholders to generate profits and grow the company. Unlike other return on investment ratios, ROE is a profitability ratio from the investor's point of view which is not the company. In other words, this ratio calculates how much money is made based on the investors' investment in the company, not the company's investment in assets or something else. Higher ratios are almost always better than lower ratios, but have to be compared to other companies' ratios in the industry.

2.4 Market Ratios Market Prospect ratios are used to compare publicly traded companies' stock prices with other financial measures like earnings and dividend rates. Investors use market prospect ratios to analyze stock price trends and help figure out a stock's current and future market

Higher earnings per share are always better than a lower ratio because this means the company is more profitable and the company has more profits to distribute to its shareholders.

2.4.2 Dividend per Share The sum of declared dividends for every ordinary share issued is the total dividends paid out over an entire year which including interim dividends but not including special dividends and divided by the number of outstanding ordinary shares issued shares. Dividends are a form of profit distribution to the shareholders. Having growing dividend per share can be a sign that the company’s management believes that the growth can be sustain.

2.4.3 Dividend Payout Ratios The price earnings ratio, often called the P/E ratio or price to earnings ratio, is a market prospect ratio that calculates the market value of a stock relative to its earnings by comparing the market price per share by the earnings per share. In other words, the price earnings ratio shows what the market is willing to pay for a stock based on its current earnings. Investors often use this ratio to evaluate what a stock's fair market value should be by predicting future earnings per share. Companies with higher future earnings are usually expected to issue higher dividends or have appreciating stock in the