In today’s briefing:
- Do Companies Tend to Focus on Shareholder Returns Because They Can’t Find Investment Opportunities?
Do Companies Tend to Focus on Shareholder Returns Because They Can’t Find Investment Opportunities?
- Looking at all listed companies over past 10 years, despite the gradual dissolution of cross-holdings, the Total Asset Turnover has not increased and the Equity Ratio level has not changed.
- Reducing equity capital through shareholder returns is effective in raising ROE, but ROE is unlikely to rise continuously if the company’s cash flow does not continue to increase.
- ROA is the product of the ROE components of net sales and asset turnover, excluding financial leverage. ROA is a key factor for increasing valuations.
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