Citadel Realty & Developers Ltd. | CITADEL
Sector : Realty  
Industry : Construction - Real Estate

Return on Equity

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Return on Equity is the measure of efficiency of the company at generating profit with respect to its net worth. A company which has high return on equity is likely to grow faster in future in comparison to one that has lesser return on equity.

It is a measure of how efficiently a company has been put its assets to use in order to generate profits. It is advisable to target companies that have RoE greater than 15%.

Net Profit Margin

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Net Profit Margin = Net Profit / Revenue

Net Profit Margin is the measure of how much of the company’s revenue actually translates into profit after covering all expenses, interest, tax etc.

If Company A has higher net profit margin than Company B both belonging to the same sector, it means that the Company A is able to generate higher amount of profit wrt cost in comparison to company B . It also means that the company A has a competitive advantage over company B due to which it is able to maintain higher net profit margin.

Net Profit vs Revenue

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Above Graph shows the variation of Profit and Revenue in last few years. If you don`t see profit growth following the similar growth in revenue, it means that the Net Profit Margin of the company has decreased over the period of time, which is a sign of increasing cost and competition.

Free Cash Flow

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Free Cash Flow= Cash flow from operations – Investment in operating Capital

Free Cash Flow represents the amount of cash that the company is able to retain out of Cash generated from Operations after meeting all its operating capital expenses. The operating capital expenses/investment represents Maintenance or Expansion of assets (buying or upgrading new Machinery, Plant etc.)

A consistently negative FCF means that the company is struggling to meet its operating capital needs with the cash that it generates from operations.