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Return on Assets

Analyzing Firms

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The Return on Assets equation measures the profit generated from each dollar of assets. When Net Profit is divided by Total Assets they display Return on Assets. A Higher return on Assets is better. There are two ways to increase return on assets, by improving either of its two specific parts. They can charge higher prices for products and increase revenue, lower operating costs or costs of goods sold, or increase the actual asset turnover rate.

However, return on assets can be too high for a company’s own goods. Return on assets that are too high means that a company isn’t properly preparing for the company’s future. These companies are failing to purchase new equipment, plant, and property that will strengthen the company in the future. Additionally, if Return on Assets is too high it may indicate manipulations of assets on the balance sheet. A common investment con is to make assets appear lower than their value, omit them from the balance sheet, or hide them in subsidiaries but include the results of their profit. This manipulates Return on Assets into appearing higher than it is. This gives the firm an appearance of health that isn’t actually found anywhere within the company and dupes investors into purchasing shares of the company. This drives up the price of shares and options held by management which is later sold for profit.

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International Economic Analysis:

  • Major Currency Economic Summaries
  • Performance of Major Imports and Exports
  • Mandates of Central Banks versus Expectations
  • Performance Indexes of Major Economies
  • Economically Correlated Currency Projections
  • Large Funds Currency Sentiment Readings
  • List of Technical Indicators to Look For
  • Occasional: Foregin Exchange Technicals Markups

American Markets Analysis:

  • Summaries of American Economic Structure
  • Performance of Major
  • Imports/Exports
  • Federal Reserve Mandate versus Expectations
  • Performance Indexes of U.S Economy
  • Economically Correlated U.S Dollar Projections
  • Large Trading Fund Index Sentiment Readings
  • Market Wide Earnings Versus Valuations
  • Fundamental Ranking of U.S Business Sectors
  • Best and Worst Future Consensus Estimates
  • Occasional: Firm Fundamental Strength Report
  • List of Technicals to Look for While Trading

WealthCE FX + Equity Analysis

Major 8 Economic Summaries
Economic Performance Index
Currency Market Sentiment
Equity Index Market Sentiment
Sector Strength Tracking
Equity EPS/PEG Estimates
Fundamental Firm Analysis
Trend Following Trading Plans

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