by Evolution AdvisorsNovember 20, 2017 Buyer Articles, Seller Articles0 comments
SageWorks Accounting Says These Types Of Small Businesses Have The Best Return On Equity
Below are a few excerpts from a recent Forbes article regarding the top industries providing the best return. To read the full article click here.
Sageworks, a financial information company, recently conducted a financial statement analysis of privately held companies to determine which U.S. industries have generated the highest return on equity (ROE) over the last 12 months. Service businesses such as those offered by lawyers, dentists, accountants, physicians and employment services firms, were among industries that topped the list. Auto repair, advertising and public relations firms, home health care and food trucks/carts also ranked among the 15 industries with the highest ROE.
ROE helps owners and potential investors see how efficiently a company is generating profits from the owners’ equity, and it helps shed light on the business’s ability to continue growing without the need for additional outside debt or equity investment. It is reportedly Warren Buffet’s favorite metric. It helps gauge, as The Motley Fool says, “whether a company is an asset creator or cash consumer.” If ROE is 59 percent, as the average is for automotive repair and maintenance firms in Sageworks’ database, it means these firms on average create 59 cents of assets for every dollar invested.