Categories
|
|
|
|
|
Frequently Asked Questions
|
|
|
|
|
 |
| Why is my ROE declining? |
|
A strong financial position is not enough by itself, to maintain high ROE levels if there is no investment/capital growth in your Holding over too many turns. ROE is averaged over the number of turns taken per level - a turn represents 1 month and ROE is calibrated for a period of 120 months (120 turns). The more turns you take with a flat net income, the more your Holding's ROE will reduce as it is averaged over the additional turns/period. New investment is required regularly to preserve a good ROE.
To obtain a high ROE each of your companies must first be returning a high ROI. Growth in ROE requires ongoing investment and strong company ROI requires avoiding discounts, maintaining strong market share, monitoring your credit rating, getting cheap materials and maximising synergy savings amongst other things. |
|
|
| Article ID: 39 |
Article Created: February 21, 2007 08:53 AM | Last Modified: February 21, 2007 08:53 AM |
|
|
