Bericht van 6 dagen geleden in de Simply Wallstreet. Het is wel contrair ten opzichte van een eerder bericht, wat nogal negatief was voor SPE.
With an ROE of 28.91%, Sopheon plc (AIM:SPE) outpaced its own industry which delivered a less exciting 11.51% over the past year. While the impressive ratio tells us that SPE has made significant profits from little equity capital, ROE doesn’t tell us if SPE has borrowed debt to make this happen. We’ll take a closer look today at factors like financial leverage to determine whether SPE’s ROE is actually sustainable. Check out our latest analysis for Sopheon
What you must know about ROE
Return on Equity (ROE) is a measure of Sopheon’s profit relative to its shareholders’ equity. An ROE of 28.91% implies £0.29 returned on every £1 invested. Generally speaking, a higher ROE is preferred; however, there are other factors we must also consider before making any conclusions.
Return on Equity = Net Profit ÷ Shareholders Equity
ROE is assessed against cost of equity, which is measured using the Capital Asset Pricing Model (CAPM) – but let’s not dive into the details of that today. For now, let’s just look at the cost of equity number for Sopheon, which is 8.30%. This means Sopheon returns enough to cover its own cost of equity, with a buffer of 20.62%. This sustainable practice implies that the company pays less for its capital than what it generates in return. ROE can be dissected into three distinct ratios: net profit margin, asset turnover, and financial leverage. This is called the Dupont Formula:
Dupont Formula
ROE = profit margin × asset turnover × financial leverage
ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity)
ROE = annual net profit ÷ shareholders’ equity
AIM:SPE Last Perf May 16th 18
AIM:SPE Last Perf May 16th 18
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Essentially, profit margin shows how much money the company makes after paying for all its expenses. The other component, asset turnover, illustrates how much revenue Sopheon can make from its asset base. And finally, financial leverage is simply how much of assets are funded by equity, which exhibits how sustainable the company’s capital structure is. Since ROE can be inflated by excessive debt, we need to examine Sopheon’s debt-to-equity level. At 17.20%, Sopheon’s debt-to-equity ratio appears low and indicates the above-average ROE is generated from its capacity to increase profit without a large debt burden.
AIM:SPE Historical Debt May 16th 18
Voor het hele artikel ga naar Yahoo daarna Finance vul in Sopheon en onder SPE komen wat artikelen te lezen.