Key financial ratios, growth rates, and rates of return - Rates of return

4 important questions on Key financial ratios, growth rates, and rates of return - Rates of return

What do investors require to make an investment worthwhile?

Their investment to generate a rate of return in excess of the WACC, just simply because returns are used to cover costs of debt, before equity holders receive a return, and a business that generates a return below WACC will generate insufficient returns for equity holders, not necessarily for debt holders.

How are equity investments that produce a total return below WACC valued?

How are equity investments that produce a total return above WACC valued?

At at discount & premium VERSUS a business that performs exactly according to return expectations.

What is the calculation of ROE?

Net income / shareholders' equity
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What does ROA express?

How profitable an investment into assets was.

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