Crystal Reports for Eclipse Designer Guide

FRReturnOnCommonEquity (NetProfit, PreferredDividend, CommonEquity)

Description
FRReturnOnCommonEquity returns the ratio between the net profit distributable to common shareholders (NetProfit-PreferredDividend) and CommonEquity.
Format
FRReturnOnCommonEquity(NetProfit, PreferredDividend, CommonEquity)
Arguments
  • NetProfit is a Number or formula. NetProfit is the amount of earnings a company earns during the year from the sale of its products or services minus all the expense items. It is the bottom line figure in a company's income statement. Some analysts may want to use the net profit before extraordinary items and/or income taxes for calculating this ratio.
  • PreferredDividend is a Number or formula. PreferredDividend is the total dividend paid out to the preferred shareholders during the accounting period being studied. This information can be found in a company's income statement and statement of change in financial position. It can also be derived in a company's balance sheet.
  • CommonEquity is a Number or formula. In general, CommonEquity is the sum of all common shares, contributed surplus, and retained earnings. All of these can be found in a company's balance sheet.
  • Action
    FRReturnOnCommonEquity returns the ratio between the net profit distributable to common shareholders (NetProfit-PreferredDividend) and CommonEquity (for example, ReturnOnCommonEqutiy = (NetProfit - PreferredDividend) / CommonEquity).
    Typical uses
    This ratio is used to measure the return on common equity employed. Note that preferred dividend is deducted prior to doing the calculation. The higher the result the higher the return.
    Examples
    FRReturnOnCommonEquity(340, 40, 600)
    Returns 0.5.
    FRReturnOnCommonEquity(245, 50, 150)
    Returns 1.3.
    None of the arguments can be negative; you may have to check for negative values before passing the arguments.
    Comments
    FRReturnOnCommonEquity is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. It can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.
    Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.



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