SeekingTruth

Why Return on Capital Is So Important to Investors

Thanks for a great summary of all these important fundamental formula's and guidelines.
You have provided some important sidenotes and caveats as well, such as how debt skews the quality of ROE, a point that is often given too little press.
Many other factors involving reporting times and accounting methods can also adversely skew ROE, reducing significantly it's value as an evaluation tool.
I always look at it , but I do not rely on it due to it's myriad faults and nuances.
I have been a fan of ROI for many years, along with other highly selected tools and indicators.

Along with these balance sheet analysis tools, a serious evaluation of pending Economic conditions are equally, if not more important, as was the case in 2006 and 2007 leading to the 2008 sharp selloff.
In 2007, the thundering herd momentum clearly carried them too far up the slope , and set them up for a steep and long fall over the clift.
During these times, the best applied balance sheet fundamental analysis generally will NOT work, and are of no help in shielding against losses. Therefore it is imperative that we do our own thorough Economic analysis due diligence when applying these excellent formula's and gudelines.
You have done us all a great service with this fine and well constructed article, and I look forward to all your future posts.