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What's the Difference Between ROE, ROI & ROCE | How to Buy a Business 

David C Barnett Small Business and Deal Making SMB
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Learn to buy a business: www.BusinessBuy...
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Investors and business people are always talking about returns…
Trouble arises when you get your words mixed up. It can lead to confusion.
Watch as I show the difference between Return on Investment, Return on Equity and Return on Capital Employed.
Fun and excitement right here: • What's the Difference ...
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28 авг 2024

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Комментарии : 35   
@thelmamorake8719
@thelmamorake8719 Год назад
Thanks David, your vedios are intensely educational. I am based in South Africa and have never had all this information explained in so much detail. I subscribed immediately and looking at taking your courses as I am interested in buying a small business soon.
@DavidCBarnett
@DavidCBarnett Год назад
Glad to have been so helpful Thelma. Let me know how it goes.
@paulntalo1425
@paulntalo1425 Год назад
Amazing factual content 🎉
@DavidCBarnett
@DavidCBarnett Год назад
Glad you think so! Happy to share.
@jongreenwood3029
@jongreenwood3029 21 день назад
Really good explanation 👏
@DavidCBarnett
@DavidCBarnett 20 дней назад
Glad it was helpful.
@johnjones4593
@johnjones4593 6 лет назад
Dude, your info is dope. I just stumbled upon your site today and SUBSCRIBED. After perusing your channel however, my only complaint is how your videos are organized. I think if you put videos pertinent to the subjects in smaller play lists you get a lot more traffic and a lot more subscriptions. I spend probably 40 hours a week on RU-vid. Believe me people are checking you out and they’re checking out because they’re frustrated of your organization of your videos. Just trying to help man I’m not gonna not be subscribed, and I’ll buy book or two of yours, but I mean you put the time and effort and so you might as well reap some more benefit. Like 179 videos in the play list on buying and selling business? They should be parsed out in more relatively linear steps of what you think is most important, and then sub categories within that. I’m literally only taking the time to comment because I think your content is phenomenal, and I think you should get more traffic.
@DavidCBarnett
@DavidCBarnett 6 лет назад
I've been thinking about this actually.. Time to get it done.. Thanks John.
@gwynbleidd07
@gwynbleidd07 2 года назад
Oh wow! thx David for this great explanation! Ш'm just starting to research investing n was looking for roce and roi differences and voila!
@DavidCBarnett
@DavidCBarnett 2 года назад
Glad it was helpful!
@eoinconnolly412
@eoinconnolly412 2 года назад
refreshingly insightful and concise, thank you.
@DavidCBarnett
@DavidCBarnett 2 года назад
Glad it was helpful!
@raid9535
@raid9535 6 лет назад
Thanks David for the explanation. I'm sure to buy your courses and learn more
@DavidCBarnett
@DavidCBarnett 6 лет назад
Thanks Ra'id. See you around online.
@civilgod
@civilgod 6 лет назад
Great video David, back on the grind...
@DavidCBarnett
@DavidCBarnett 6 лет назад
Good to hear from you again Byron.
@lfs-x1r
@lfs-x1r Год назад
So which financial metric reflects best the potencial for a stock price to go up?
@DavidCBarnett
@DavidCBarnett Год назад
I'm not really a publicly-traded stock guy. All my content is within the small business world.
@KingDingeling590
@KingDingeling590 Год назад
Hey David. After watching this, I would say if I like to invest in a stock, then ROCE is the most interesting number to me, because I see how much a Company made that also includes their debt. After seeing this good example from you, ROE could be very misleading, right? It does not take into Account the Debt or Borrowed money the Company used. ROCE does, right?
@DavidCBarnett
@DavidCBarnett Год назад
If you tried to maximize ROE, you could end up with an over-leveraged company. That can make it shaky if things go badly. Over the last decade, lots of private companies have used debt to finance share buy-backs. This is to increase ROE. We'll see how they do in this rising rate environment....
@KingDingeling590
@KingDingeling590 Год назад
@@DavidCBarnett So ROCE takes of care of that right? Because it includes Debt or cost of Debt, right?
@gopireddygayam3805
@gopireddygayam3805 4 года назад
Nice explanation sir thank you
@DavidCBarnett
@DavidCBarnett 4 года назад
Thanks for watching. Glad to be able to help.
@cenafanist
@cenafanist 2 года назад
How much roe is normal then
@DavidCBarnett
@DavidCBarnett 2 года назад
Sorry, another 'it depends' answer. It can vary by industry and by what the owners want. ie, applying more leverage to boost ROE but it makes the business less stable.
@vinbat1990
@vinbat1990 3 года назад
Hey david nice video.Is there any difference between ROIC and ROCE?
@DavidCBarnett
@DavidCBarnett 3 года назад
ROIC or Return on Invested capital is used to figure out how much you'll make when buying a business. Some of the transaction databases I use refer to 'Market Value of Invested Capital' instead of 'selling price.'
@alexh.4842
@alexh.4842 2 года назад
@@DavidCBarnett So ROIC and ROI are the same things or not?
@rafsalashrafvaliyakath910
@rafsalashrafvaliyakath910 4 года назад
Hi, Hi, Didn’t get the point you referring the point to your franchise friend that its not 200k$, but its 800K$. Can you pls specify how you come up to that?
@DavidCBarnett
@DavidCBarnett 4 года назад
The amount of money he invested in business was $800K. If you only consider the equity he put in, then you're not looking at return on investment, you're looking at return on equity. If you buy an apartment block for $1M, then you invested a million dollars in real estate. It doesn't matter that you borrowed 900K of it, for example.
@SportExtreme42
@SportExtreme42 3 года назад
@@DavidCBarnett So, what you basically mean is that, in this same context, the guy invests 200K cash, and borrows the other 600K from the bank? And so the 200K is considered as equity while the 600K is considered as debt?
@DavidCBarnett
@DavidCBarnett 3 года назад
@@SportExtreme42 you got it.
@alisonnorcross951
@alisonnorcross951 4 года назад
Where is the ROCE?
@DavidCBarnett
@DavidCBarnett 4 года назад
It's the first one discussed.
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