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Francescas Holdings Corp (NAS:FRAN)
Return on Equity
40.88% (As of Apr. 2014)

Return on equity is calculated as net income divided by its total shareholder equity. Francescas Holdings Corp's annualized net income for the quarter that ended in Apr. 2014 was $34.2 Mil. Francescas Holdings Corp's total shareholder equity for the quarter that ended in Apr. 2014 was $83.7 Mil. Therefore, Francescas Holdings Corp's annualized return on equity (ROE) for the quarter that ended in Apr. 2014 was 40.88%.

FRAN' s 10-Year Return on Equity Range
Min: 57.44   Max: 133.13
Current: 57.44

57.44
133.13

During the past 5 years, Francescas Holdings Corp's highest Return on Equity (ROE) was 133.13%. The lowest was 57.44%. And the median was 65.31%.

FRAN's Return on Equityis ranked higher than
99% of the 1103 Companies
in the Global Specialty Retail industry.

( Industry Median: 9.14 vs. FRAN: 57.44 )

Definition

Francescas Holdings Corp's annualized Return on Equity (ROE) for the fiscal year that ended in Jan. 2014 is calculated as

Return on Equity (ROE)=Net Income (A: Jan. 2014 )/Total Shareholder Equity (A: Jan. 2014 )
=44.839/78.067
=57.44 %

Francescas Holdings Corp's annualized Return on Equity (ROE) for the quarter that ended in Apr. 2014 is calculated as

Return on Equity (ROE)=Net Income (Q: Apr. 2014 )/Total Shareholder Equity (Q: Apr. 2014 )
=34.24/83.741
=40.89 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

In the calculation of annual return on equity, the net income of the last fiscal year issued. The Total Shareholder Equity is from the end of year data. Strictly speaking, average Total Shareholder Equity should be used. In calculating the quarterly data, the Net Income data used here is four times the quarterly (Apr. 2014) net income data. Return on equity is displayed in the 10-year financial page.


Explanation

Return on Equity (ROE) measures the rate of return on the ownership interest (shareholder's equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity (also known as net assets or assets minus liabilities). ROE shows how well a company uses investment funds to generate earnings growth. ROEs between 15% and 20% are considered desirable.

The factors that affect a company’s Return on Equity (ROE) can be illustrated with the Du Pont Formula:

Return on Equity (ROE)(Q: Apr. 2014 )
=Net Income/Total Shareholder Equity
=34.24/83.741
=(Net Income / Revenue)*(Revenue / Total Assets)*(Total Assets / Total Shareholder Equity)
=(34.24 / 85.424)*(85.424 / 150.472)*(150.472 / 83.741)
=Net Profit Margin*Asset Turnover*Leverage Ratio
=0.4008*0.5677*1.7969
=Return on Assets*Leverage Ratio
=0.2275*1.7969
=40.89 %

Note: The Net Income data used here is four times the quarterly (Apr. 2014) net income data.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

With this breakdown, it is clear that if a company grows its Net Profit Margin, its Asset Turnover, or its Leverage, it can grow its return on equity.


Be Aware

Because a company can increase its return on equity by having more financial leverage, it is important to watch the leverage ratio when investing in high ROE companies. Like ROA, ROE is calculated with only 12 months data. Fluctuations in company’s earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective. ROA can be affected by events such as stock buyback or issuance, as well as by goodwill, the company’s tax rate and its interest payment. Return on assets may not reflect the true earning power of the assets. A more accurate measurement is Return on Capital (ROC).

Asset light businesses require very few assets to generate very high earnings. Their ROEs can be extremely high.


Related Terms

Return on Assets, Return on Capital, Return on Capital - Joel Greenblatt, Total Equity


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Francescas Holdings Corp Annual Data

Jan10Jan11Jan12Jan13Jan14
ROE 0.000.000.000.000.000.000.00133.1365.3157.44

Francescas Holdings Corp Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
ROE 197.68126.04118.8477.1682.5651.8858.0446.4454.3640.88
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