"Multibagger Stocks की पहचान का Secret — ROE vs ROCE!"

"Multibagger Stocks की पहचान का Secret — ROE vs ROCE!"


ROE vs ROC – The Hidden Secret to Identifying Truly Profitable Companies!

When analyzing businesses, two financial ratios stand out as true indicators of performance — ROE (Return on Equity) and ROC (Return on Capital). Understanding the difference between them can help you separate good companies from great ones — and avoid investing in businesses that look profitable on paper but actually destroy value over time.

ROE measures how efficiently a company generates profit from shareholders’ equity. In simple terms, it tells you how much return the company gives for every rupee invested by shareholders. A higher ROE means the company is using shareholders’ funds effectively to generate profits. But here’s the catch — a company can show a high ROE by taking on too much debt, which can inflate returns temporarily but increase financial risk.

That’s where ROC (or ROCE – Return on Capital Employed) comes into play. ROC measures how efficiently a company generates profit from total capital employed, which includes both debt and equity. This ratio shows how well the business is using all available capital to create returns, not just shareholders’ money.

A healthy and sustainable business typically shows a strong ROC along with a healthy ROE. If ROE is high but ROC is low, it means the company’s profits are driven mostly by debt, not operational efficiency — a red flag for long-term investors.

Understanding ROE and ROC is like reading the heartbeat of a company. These ratios reveal how efficiently the management allocates capital, and whether the business can sustain growth without taking excessive leverage. True compounding happens in companies that generate high ROCE consistently over time, with little or no debt.

So before investing in any company, always ask — Is this growth real or borrowed?

Dont forget to subscribe our youtube channel LiveinnLatvia on travelling and personality Development :    / @liveinnlatvia  

Dont forget to subscribe our new channel on stock market investing for more info -

   / @udtaarrow  

Feel free to subscribe our youtube channel on 3d modelling in sketchup -
   / @sketchupin2minsinhindi187  

Feel free to connect me on facebook :   / 16jocmalfk  

Feel free to reach me on Instagram : https://instagram.com/adilafsar?igshi...
---

#ROEvsROC #FinancialEducation #InvestingBasics #StockMarketIndia #WealthCreation #ValueInvesting #InvestmentTips #EquityAnalysis #ROEExplained #ROCEExplained #SmartInvesting #BusinessGrowth #FinancialLiteracy #Equity24 #StockMarketLearning