How are balance sheet profitability ratios (ROA, ROE, ROCE/ROIC) used specifically for credit analysis?
I can't find an good intuitive explanations I'm happy with on Investopedia.
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Is ROE useful at all in the realm of credit?
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How is ROCE (capital employed) used in comparison to ROA? My understanding is that ROCE should be above the average interest rates of the debt financing the company; if it's not at least that then the capital employed is barely making enough to fund itself.
For ROA, it kind of makes sense in that it's basically a matter of if what the company owns is being used to make good profits, but if I can't really place my finger on when you'd specifically look at ROA vs ROCE and what you'd learn from one but not the other.
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