Month-on-month growth rate of return on tangible capital
factor.formula
ROTC month-on-month growth rate = (current period ROTC - previous period ROTC) / abs(previous period ROTC)
This formula calculates the month-over-month growth rate of return on tangible capital (ROTC), which is used to measure the change in a company's profitability on tangible assets.
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Return on tangible capital (TTM) for the current period (most recent reporting period). Return on tangible capital (ROTC) measures a company's ability to generate profits using tangible assets. It is usually calculated as: after-tax operating profit / (total assets - intangible assets - goodwill - long-term deferred expenses - deferred tax assets). After-tax operating profit usually uses TTM (last 12 months) data to reduce seasonal effects.
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Return on tangible capital (TTM) for the previous period (last reporting period). Same definition as current period ROTC, but using data from the last reporting period.
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The absolute value of the return on tangible capital (TTM) for the previous period. The absolute value is used to avoid the growth rate calculation result becoming meaningless when the denominator is negative. When the previous period ROTC is close to 0, this factor may fluctuate significantly.
factor.explanation
The higher the value of this factor, the greater the month-on-month growth of the company's return on tangible capital, and the continuous improvement of profitability, reflecting the improvement of the company's operating efficiency and profit quality. This factor can help investors capture companies with significant improvements in tangible capital profitability and can be used for trend tracking and stock selection strategies.