Question: What is your feed back on the below: ROA and PE are very important financial metrics that help evaluate the overall financial stability year over
What is your feed back on the below:
ROA and PE are very important financial metrics that help evaluate the overall financial stability year over year. ROA is a profitability ratio and finalized operating results are, for instance: net income/average total assets. This rate of return measure uses the total assets as the base and indicates how efficiently the company utilizes the assets/capital of a company. PE ratio indicates how the equity of a company is assessed in the capital market. PE reflects the combined influence of risk. PE ratio is the market price per share/earnings per share. PE ratio reflects growth, risk, orientation, and liquidity for a company along with its stock. A company that I am familiar with is DTE (Detroit Edison Electric). The companys ROA is 3.20%, and its PE is 17.12X. These kinds of metrics help investors measure the financial health of DTE. ROA indicated earnings are $3.20 as net income for every $100. As this is very healthy for a company. DTEs PE ratio indicates that the stockholders and market view is exceptionally healthy, and growth continuation will thrive.
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