Secondly, even when compared to the industry average of 22% the company's ROE is quite impressive. GoPro's Earnings Growth And 63% ROEįirstly, we acknowledge that GoPro has a significantly high ROE. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. ![]() Why Is ROE Important For Earnings Growth? Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.63 in profit. ![]() The 'return' is the income the business earned over the last year. So, based on the above formula, the ROE for GoPro is:Ħ3% = US$373m ÷ US$593m (Based on the trailing twelve months to June 2022). Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
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