How appropriate is the bank's capital profit rate?

How appropriate is the bank's capital profit rate?

First of all, what is the appropriate rate of return on assets?

The asset profit rate of general manufacturing enterprises is between 5- 10%. The profit rate of total assets represents the basic ability of enterprises to use funds for profit-making activities. This ratio is mainly used to discuss the assets and liabilities of an enterprise and can be extracted and calculated from the balance sheet. From this, a number of profit rate indicators are derived to measure the operating conditions of enterprises, such as pre-tax profit rate, net profit rate and gross profit rate.

Secondly, it is clear what is the capital profit rate, and the asset profit rate is also called the investment profit rate, the asset return rate, the asset return rate, and the enterprise capital profit rate, which is an index reflecting the profitability of enterprise assets. Refers to the ratio between the profits realized by an enterprise in a certain period and the average assets occupied in the same period. The profit rate of enterprise assets can promote enterprises to improve production and management in an all-round way and continuously improve economic benefits.

Then, the calculation formula of asset profit rate is:

Asset profit rate = (total profit/average assets owned) × 100%

This indicator can be further extended to:

Asset profit rate = sales profit rate × asset turnover rate

The higher the ratio, the better the asset utilization efficiency of the enterprise, the stronger the profitability of the whole enterprise and the higher the management level.

(Part of the information comes from Gao Dun Education Bian Xiao: lverson.reng)

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