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Capital account deficit |
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Capital account deficitDebits minus credits on capital account. See deficit.Similar MatchesCapital growthCapital growthIn general terms, the increase in value of an asset.As far as shares are concerned, capital growth is an increase in share price compared to what you paid, and is one of the elements of what investors called 'total return', the other component being income through dividends.Research has shown that investing in shares over the last 50 years produced a better total return than investments in bonds or deposits, and capital growth has been a major part of that superior performance. There is certainly no guarantee that shares will continue to outperform other investments, but most observers believe that they will over the long term. Capital account balanceCapital account balanceBalance on capital account Capital depreciationCapital depreciationSee depreciation. Return on capital employedReturn on capital employedA measure of a company's profitability. It may be defined as:Earnings before interest and tax divided by total capital employed plus short term borrowings minus total intangibles.ROCE takes all the assets employed in the business, including borrowings, and measures the return the company made on them. If a company has a low ROCE, it is using its resources inefficiently, even if its profit margin is high.Calculation: multiply operating profit by 100, and divide the result by total capital employedExample: Company A made an operating profit of £897m on total capital employed of £4,342m. ROCE was therefore (897 x 100) / 4,342= 20.66%Yardstick: A company's ROCE should be higher than the return on gilts (the benchmark for a risk-free investment return). And unless it is higher than the cost of borrowing, any increase in the company's borrowings or the general level of interest rates will reduce shareholders' earnings. A ROCE of 20% or more is considered very good. Share capitalShare capitalThe proportion of a company's capital which derives from the issue of ordinary shares and preference shares. Further SuggestionsComplete capital marketCapital International Indexes Capital Fulcrum Point Capital appreciation "Soft" capital rationing Contributed capital Marginal efficiency of capital Capital augmenting overcapitalised capital shares Return to capital capital adequacy Perfect capital market Paid in capital Return of capital Working capital management split capital investment trust capital allowance loan capital Capital good Nasdaq small capitalization companies Capital allocation decision issued share capital Capital surplus working capital |
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