Response to:
Return on equity calculates the returns and its accuracy or competency that was done by an individual or by a firm on an investment. It measures a companies performance and the their efficiency of reporting. It tells how much a company has made compared to its net assets. It can be helpful when comparing two of the same companies to evaluate the best ways to invest money.
To calculate the return on equity (ROE), divide net earnings by shareholder equity and multiply that by 100
ROE=(Net Earnings / Shareholders’ Equity) x 100
Earnings per share shows money earned to a company in stocks. It is how companies evaluate their share prices. It is how investors and analysts predict how stock pricing will change. When the earnings per share price increases so does the stock prices.
To calculate earnings per share (EPS), divide total earnings by outstanding shares
Understanding ROE and EPS is important to a companies value because it allows to view the money that is being made and the potential for growth. These values determine the success or failure of a company and provide proof with numbers of profit. Showing what can be changed to improve and what is not working that may need alterations.
Target’s Net earnings in 2020 is approximately 4.4B and their average shareholders equity is 11.80B X 100 = 37.29
Target’s total earnings is approximately 93.56B and their outstanding shares average 524.30M = .178
I think Target’s results show that they are doing very well as a company, continue to do do well yearly, and have a future of more success.
Forbes(2021). https://www.forbes.com/advisor/investing/roe-return-on-equity/
Stock Analysis(2021). https://stockanalysis.com/term/eps-earnings-per-share/
Statista(2021). https://www.statista.com/statistics/256008/net-earnings-of-target-in-north-america/
YCharts(2021). https://ycharts.com/companies/TGT/shareholders_equity