Source: Shutterstock With its stock down 14% over the past month, it is easy to disregard Tourmaline Oil (TSE:TOU). However, a closer look at its sound financials might cause you to think again. Given that fundamentals usually drive long-term market outcomes, the company is worth looking at. In this article, we decided to focus on Tourmaline Oil’s ROE. Return on equity or ROE is a key measure used to assess how efficiently a company’s management is utilizing the company’s capital. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. How Do You Calculate Return On Equity? ROE can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity So, based on the above formula, the ROE for Tourmaline Oil is: 38% = CA$5.5b ÷ CA$15b (Based on the trailing twelve months to September 2022). The ‘return’ refers to a company’s earnings over the last year. That means that for every CA$1 worth of shareholders’ equity, the company generated CA$0.38 in profit. What Is The Relationship Between ROE And Earnings Growth? We have already established that ROE serves as an efficient profit-generating gauge for a company’s […]
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