Should You Be Excited About KJTS Group Berhad's KLSE:KJTS 15% Return On Equity?

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• Corporations are organized in, and are regulated by, one of the fifty states.
• ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders.
• Negative equity can arise if the company has negative retained earnings, meaning that their profits were not strong enough to cover expenses.
• The two indexes even share common components, including Apple, Microsoft and Alphabet.

Understanding Retained Earnings

Companies may have bonds payable, leases, and pension obligations under this category. Get instant access to video lessons taught by experienced investment bankers. Learn financial statement modeling, DCF, M&A, LBO, Comps and Excel shortcuts. In contrast, early-stage companies with a significant number of promising growth opportunities are far more likely to keep the cash (i.e. for reinvestments). Stockholders' equity is also referred to as shareholders' or owners' equity. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader.

• Now that we’ve gone over the most frequent line items in the shareholders’ equity section on a balance sheet, we’ll create an example forecast model.
• Cash takes up a large portion of the balance sheet, but cash is actually not considered an asset because it is expected that cash will be spent soon after it comes into the business.
• For sole traders and partnerships, the corresponding concepts are the owner’s equity and partners’ equity.
• If a company does not have enough cash flow or assets to cover their liabilities, they are in what is known as "negative equity."
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Understanding Shareholders’ Equity

KJTS Group Berhad has a debt to equity ratio of just 0.076, which is very low. The combination of modest debt and a very respectable ROE suggests this is a business worth watching. Careful use of debt to boost returns is often very good for shareholders.

Dow performance vs. Nasdaq performance

Over time, the company’s shares will change in value; the company may also issue more shares or buy some back from investors. All these things affect stockholders’ equity, as do the assets and liabilities a company accrues over time. Investors and financial analysts use shareholders’ equity as one way to assess a company’s financial situation. Usually, if the number is positive, the company can stockholders equity formula afford to pay off its liabilities, while a negative number could indicate financial trouble. Keep in mind that book value alone is not a definitive indicator of fiscal health, and it should be considered along with the company’s overall balance sheet, cash flow statement, and income statement. Stockholders' equity is the remaining assets available to shareholders after all liabilities are paid.

Return on Equity (ROE) Ratio

Shareholders' equity includes preferred stock, common stock, retained earnings, and accumulated other comprehensive income. Shareholders' equity may be calculated by subtracting its total liabilities from its total assets—both of which are itemized on a company's balance sheet. Stockholders' equity is equal to a firm's total assets minus its total liabilities. Treasury shares continue to count as issued shares, but they are not considered to be outstanding and are thus not included in dividends or the calculation of earnings per share (EPS).

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We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Through years of advertising and the development of a customer base, a company's brand can come to have an inherent value.

Equity is used as capital raised by a company, which is then used to purchase assets, invest in projects, and fund operations. A firm typically can raise capital by issuing debt (in the form of a loan or via bonds) or equity (by selling stock). Investors usually seek out equity investments as it provides a greater opportunity to share in the profits and growth of a firm. The equity of a company is the net difference between a company's total assets and its total liabilities.

Private Equity