Fat Cat Tim Buddy

ROE = EPS / NTA - is incorrect

ROE = EPS / EQUITY - correct

NTA - nett tangible assets

equity include intangible.

next time when copy article please do some revision la, and dont keep posting ages article..

2012-05-03 12:10

loke35

Please post in English, we are in Malaysia.

2012-05-03 22:03

stncws

please learn chineses lah..

2012-05-03 22:30

jacklew

In Malaysia, then post in Malay...why English??

2012-05-03 22:35

jacklew

stncws: Agreed. Should learn mandarin.

2012-05-03 22:36

chongkonghui

Agreed.

2012-05-22 11:48

Namoyaki Takarajima

Dear Friends, Note: Translated as per above. Please make a correction if you may find it is wrongly translated at anywhere. Thanks friends, we are all friends in here. Love, Namoyaki T.
*
As a small shareholder is difficult to know the company's daily operations.
If management really wanted to be "unethical" business practices to account for the small shareholders cheap is easy.
This is the real thing, no one way to change it.
But I believe that this world will not be all bad, it is a good man.
Therefore, not all companies are bad, the stock market is a good company.

The question is: how to distinguish between good and bad?

I like this: Stuck in this case, the company set up to make money, make money for shareholders.
Whether black or white, able-and-mouse is a good cat.
Which companies can make money for shareholders, it is a good company.

The company makes money is reflected in its performance.

The money is reasonable is reflected in its ROE is net earnings (EPS) by dividing the net assets per share (NTA).

ROE = EPS / NTA

Under normal circumstances the ROE to reflect the quality of management.
If management has accounted for the minority shareholders of cheap, the company's profit will suffer through the ROE, we will be able early alert!
Of course, in some cases, good management can not prevent the loss of the company, so we can not simply conclude that management is not good from the poor performance of the ROE.
In any case, the ROE is not good that we avoid, so that we can save a lot of trouble.

Warren BUFFETT think:
As long as the net earnings of EPS by dividing the net assets per share NTA is greater than 0.15, the company's profit is very reasonable!
In other words: the ROE greater than 0.15 is reasonable.

How to interpret the ROE is equal to 0.15?

ROE is equal to 0.15 means that: net assets of each 1.00 ringgit to 0.15 ringgit of profit within a year to earn.
In other words, the company's net assets each year can earn 15% profit.

Example:
RUBBEREX net profit per share (EPS) is 0.245 ringgit per share, net assets (NTA) is 1.53 ringgit.
The ROE = 0.245 / 1.53 = 0.16

In other words, for every 1 ringgit, RUBBEREX the net assets each year can earn 16% profit!
Year to earn 16 per cent, which of course is very good!
(By contrast, the money in the bank can only earn 4%!)
So RUBBEREX money is very reasonable!

Of course, companies can also be cooking the books to deceive the minority shareholders, such as the United States ENRON.

So how do you know the company's accounts are reliable?

Number of words can be deceiving, the only real money is not a lie!

What is the real money?
Dividend is real money!

Dividend checks to shareholders.
Anything can be deceived, only dividends can not lie!

As long as the company received dividend checks my heart at ease: it is really to make money!

So, I think, as long as the ROE of the selected stock of more than 0.15, and the company is a dividend, we will be able to greatly reduce the risk of "picking"!

RUBBEREX year the dividend is 20 per cent investment to buy one will be able to get a dividend of 200 ringgit.
RUBBEREX accounts on it for a year can earn 245 ringgit, and to distribute a dividend of 200 ringgit to shareholders, such a profit, of course, is false can not!

We want to choose this company!

Conclusion:

1) can be maintained above 0.15 the ROE, the company must have good management and superior way to make money.
2) to pay a dividend, you can ensure that companies with the highest real, rather than the number of words.

This is to avoid the risk of "picking".

2012-05-22 12:23

euscilyn

Thanks Namoyaki, Hope to receive more translated from you. It's help me more clear understanding.

2012-05-22 13:31

Trader Hub

Namoyaki, why don't you create a new blog here and post all your translated articles into the blog. That way, we will be able to read all the English version articles from a separate blog here.

p/s: Also, with new blog post you can translate the post title, hence it is easier for us to know what to read from the post title..

2012-05-22 13:36

Namoyaki Takarajima

dear Trader Hub, much appreciated for the idea given. building a chapter by chapter would be nice for our reference in the future. i must quickly study this investor.com web system & arrangement. i like to help people even when i am down, ever since im here, i met lots of good people, good energy, good heart. thanks euscilyn, a word from you made my day.

2012-05-22 13:58

aunloke

By definition ROE is not EPS/NTA but the value is quite close,thank to our accounting system that the value of intangible asset ( like special right, brand name, wide moat etc.) is not included in the balance sheet. In most balance sheets ROE=EPS/EQUITY PER SHARE is only slightly smaller than EPS/NTA sometimes can be equal if there is no minority interest included, this explain some people mistakenly use ROE=EPS/NTA.

2012-05-22 14:18

Namoyaki Takarajima

Dear Tan Kian Wei, that is easy! Simply is always the best. some other blog are difficult for us to follow their system style. Thank you very much. You guys must wait a story from my side where i walked to fishing village in Penang and Kedah and asked them about SAVING, one old lady told me that "money do not have magnet, but we did". :) mingling around with the children at kuala muda kedah is another breathtaking experience. I asked them, what is SAVING? they simply answered this: "Ermmm...Bila di Jeti kami dah ada Bank, tempat kami mesti dah OK". :)

2012-05-22 14:28

Gajah

Very good of Bro Namo to translate. But he can't do this every time, also busy bah! So why not do-it-yourself. Go to Google Translate, copy paste the article in whatever language, the translation arrives instantly.

2012-05-22 14:34

winwin

NTA, DY, ROE, EPS, PE are most easiest method to understand and fundamental of each stock. For me, fundamental weighing ratio is 70%, vs technical analysis 30%.if economic turn bad, the ratio for fundamental may increase to 90% compare to TA.it means focus more on blue chip or strong cash flow stock.

2012-05-22 15:03

aunloke

Good translation, I don't think Google can compare. I have read through both posting. the translation is perfect , so carry on the good work.

2012-05-22 15:33

alntm

food for the mind, when markets are bearish. thumbs up..

2012-05-22 15:43

kl foong

agree with Kian Wei.

2012-05-22 16:23