Virtually all companies need money to invest in the business, to grow profits. Nonetheless, it might be wise to check if insiders have been selling.
We prefer it when the ROE of a company is above the industry average, but it's not the be-all and end-all if it is lower. TSX:APR.UN Past Revenue and Net Income, July 3rd 2019
If you look at the image below, you can see Automotive Properties Real Estate Investment Trust has a lower ROE than the average (9.4%) in the REITs industry classification. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. Does Automotive Properties Real Estate Investment Trust Have A Good Return On Equity? That means it can be interesting to compare the ROE of different companies. So, all else being equal, a high ROE is better than a low one. That means that the higher the ROE, the more profitable the company is. Return on Equity measures a company's profitability against the profit it has kept for the business (plus any capital injections). You can calculate shareholders' equity by subtracting the company's total liabilities from its total assets. It is all the money paid into the company from shareholders, plus any earnings retained. Most know that net profit is the total earnings after all expenses, but the concept of shareholders' equity is a little more complicated. Or for Automotive Properties Real Estate Investment Trust:Ģ.9% = CA$6.8m ÷ CA$230m (Based on the trailing twelve months to March 2019.) Return on Equity = Net Profit ÷ Shareholders' Equity View our latest analysis for Automotive Properties Real Estate Investment Trust How Do I Calculate ROE? That means that for every CA$1 worth of shareholders' equity, it generated CA$0.029 in profit. To keep the lesson grounded in practicality, we'll use ROE to better understand Automotive Properties Real Estate Investment Trust ( TSE:APR.UN).Īutomotive Properties Real Estate Investment Trust has a ROE of 2.9%, based on the last twelve months. While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
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