Files & Resources: breakingintowallstreet.com/kb/financial-statement-analysis/return-on-assets-roa/ Table of Contents: 0:00 Introduction 0:50 The Short Answer 3:05 Part 1: ROA Calculations for Target and Costco 6:32 Part 2: ROA for Banks (JPM, Citi, Wells, and BofA) 9:49 Part 3: ROA in Real-Life Financial Models 10:46 Recap and Summary
@StockSpotlightPodcast4 ай бұрын
I like comparing it to the Effective Interest Rate on Debt %
@financialmodeling4 ай бұрын
Not really sure how that relates, but sure, I guess. I think there are probably more specific metrics that a bank or insurance company would use for analyzing assets/liabilities.
@TheJoker-qn6vw6 ай бұрын
Can you do a video on valuing insurance companies? They tend to be quite tricky to value. Thanks and awesome video.
@financialmodeling6 ай бұрын
Thanks. There are quite a few videos on bank modeling in this channel, which is similar. We may cover insurance in the future but it's a fairly technical topic without broad appeal.
@TheJoker-qn6vw6 ай бұрын
@@financialmodeling Got it.
@csanton39465 ай бұрын
Valuation will always be based on earnings. Dont be distracted by other multiples. Just know how a bank financial profile work, how an insurance financial profile work. Banks are usually leveraged 10x. 10 equity means 100 assets. Revenue of banks are based on its assets which is the money. Cost of money 5% this makes 5 dollar revenue and given a 20% profit margin you have 1 dollar income to a 10 dollar equity or simply summarized as : 10% ROE, 20x Asset Turnover, 20 percent profit margin If PEmultiples is 10x earnings then you can say tge relationship of valuation to banks is 1x price to book, 2x revenue, 10x earnings, Insurance companies financial profile are On capital 30% equity 20% debt 50% reserve losses On asset 40% working capital 60% investment asset Revenues are usually 15% of assets and profit margin 20 % So an equity of 30 means total assets of 100 with 15 revenue and 3 dollar in income. 3 over 30 means an ROE of 10% and a PE of 10x means prices or market cap of equity is at 30 Always be aware of financial profile, then get ROE, then apply reasonae PE, then you have a pricing idea based on other metrics such as asset or book value
@jakerucker32946 ай бұрын
👍
@financialmodeling6 ай бұрын
Thanks for watching!
@vidya0144 ай бұрын
How about : Net Income ÷ ( Total asset + Total Liabilities )
@financialmodeling4 ай бұрын
It doesn't really make sense conceptually because Total Assets + Total Liabilities does not represent any specific concept or sum to any specific number.
@vidya0144 ай бұрын
@@financialmodeling the concept is: the lowest contrarian price you can get by multiply it by EPS.
@ajraol90326 ай бұрын
It feels a crime to watch these videos & resources for free
@financialmodeling6 ай бұрын
Thanks! To be fair, these videos are also all promotional to some extent. But not as blatant as in other KZbin channels, sure.