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If a portfolio has negative net assets, i.e. it is a net liability, then a positive return on the portfolio net assets indicates the growth of the net liability, i.e. a further loss. Example. US$10,000 interest is accrued on a US$200,000 loan borrowed from a bank. The liability has grown 10,000/200,000 = 5 percent.
Return on invested capital formula ROIC = NOPAT / Average Invested Capital There are three main components of this measurement that are worth noting: While ratios such as return on equity and return on assets use net income as the numerator, ROIC uses net operating income after tax (NOPAT), which means that after-tax expenses (income) from financing activities are added back to (deducted from ...
This is a return of US$20,000 divided by US$100,000, which equals 20 percent. The US$20,000 is paid in 5 irregularly-timed installments of US$4,000, with no reinvestment, over a 5-year period, and with no information provided about the timing of the installments. The rate of return is 4,000 / 100,000 = 4% per year.
Industry average. Industry averages (of financial ratios) are generally using as benchmarks or tools which helps business to make comparisons that helps to determine its position within the industry and evaluate financial performance of the business. [1] It is a useful tool for business managers and investors, helps with decision making process ...
Net Worth Formula. Net Worth = Assets - Liabilities. For example, if your total assets equal $600,000 and your total liabilities equal $400,000, your net worth is $200,000.
Understanding your financial worth is a crucial component in managing your personal finances. The total value of your physical assets, or your tangible net worth, is a key measure of this. By ...
Return on investment. 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 ...
Internal rate of return. Internal rate of return ( IRR) is a method of calculating an investment 's rate of return. The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk . The method may be applied either ex-post or ex-ante.