|
|
Mean return |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Mean returnSee: Expected returnMean return Similar MatchesExpost average rate of returnExpost average rate of returnThe historical mean percentage an asset has yielded. Tax returnTax returnA form on which certain taxpayers annually list their salary (including pensions), or income from self employment together with benefits in kind, other income and capital gains. This information is used by the Inland Revenue to assess tax liability. Simple rate of returnSimple rate of returnThe return from investments figured by dividing income plus capital gains by the amount of capital invested. The effect of compounding is not taken into account. Return on investment (ROI)Return on investment (ROI)Generally, book income as a proportion of net book value. 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. Further SuggestionsRate Of ReturnRate of return Increasing returns to scale Money rate of return Market RRR (required rate of return) Schedule Total dollar return Risk return tradeoff Certainty Equivalent Return Expected return on investment Cash on cash return Annual rate of return Separate tax returns real return total return Expected return beta relationship Realized return Interim rate of return Individual tax return Cumulative total return Excess return on the market portfolio Return on sales Arithmetic average (mean) rate of return Pretax rate of return Total return Average accounting return |
|
|
|