Performance Ratio
 
We have evolved to measure performance from traditional “ROC” and “PE Ratios” using a holistic “next generation” of evaluation metrics and performance ratios, such as Price/Adjusted Earnings, Returns on Capital Adjusted for Externalities.
High negative externalities can lead to poor adjusted returns on capital (ROCX) and inflated price/true earnings ratios (PEX) signaling risk and concern to investor. Positive externalities increase corporate value-addition and signal healthy returns ROCX and attractive PEX ratios.

 

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