📊 ROE & ROCE Explained in Tamil
Stock Market Master Course – Lesson 9
📌 ROE na enna?
ROE = Return on Equity
Formula = Net Profit / Shareholder Equity × 100
Company shareholder money use pannitu evlo return generate pannudhu nu kaamikum ratio dhaan ROE.
Example:
Net Profit = ₹100 Cr
Equity = ₹500 Cr
ROE = 100 / 500 × 100 = 20%
👉 15% mela consistent ROE irundha strong company nu consider pannalaam.
---📌 ROCE na enna?
ROCE = Return on Capital Employed
Formula = EBIT / (Total Assets – Current Liabilities) × 100
ROCE company total capital (Equity + Debt) use pannitu evlo efficient ah earn pannudhu nu kaamikum.
ROCE high na business efficient ah run aagudhu.
Debt irundhaalum proper ah use pannudhu nu artham.
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📊 ROE vs ROCE Comparison
| Aspect | ROE | ROCE |
|---|---|---|
| Focus | Shareholder Return | Total Capital Efficiency |
| Debt Impact | Debt increase panna ROE artificial ah increase aagalam | Debt impact balanced ah reflect aagum |
| Best For | Asset-light business | Capital-intensive business |
⚠️ Important Red Flags
- ROE high but ROCE low → Excess debt signal
- Sudden spike in ROE → One-time profit
- Declining ROCE → Business efficiency reduce aagudhu
🎯 Smart Investor Insight
Long term wealth create panna ✔ Consistent ROE ✔ Consistent ROCE ✔ Low Debt Ithu combination dhan multibagger signal 🔥
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Disclaimer:
This content is only for educational purposes. Stock market investments are subject to market risks. Universal Money Mart does not provide stock tips or recommendations.
This content is only for educational purposes. Stock market investments are subject to market risks. Universal Money Mart does not provide stock tips or recommendations.
