Management Efficiency
Ratios
A strong
management team is one of the key elements for a good
company other than corporate business model, products
and services etc...
ROI and ROE are
the management efficiency ratios use to measure how much earnings a
company extracts from its resources or assets.
Return On Investment
(ROI)
|
Return on investment ROI also known as return on assets ROA.
Return on Investment ROI = Net Income /
Total Assets
Beside ROI, investors should look the the assets used
to generated the return whether is bought or leased.
Lease assets can generate high ROI but cost more to the
company in the long run than to own them.
|
Return on Equity (ROE )
|
Return on Equity ROE is Rate of return of the
stockholders' investment.
Return on Equity ROE =
Net Income
/
Stockholders' Equity
|
Management Efficiency Ratios