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For an assignment, I calculated the Return on Equity for a company over the past 5 years. To make more accurate predictions about long-term future
For an assignment, I calculated the Return on Equity for a company over the past 5 years.
To make more accurate predictions about long-term future growth, I broke down the ROE into RNOA, FLEV and Spread.
Now I realized that the spread in one of the years is negative (-28.31%), where all other year's have positive spreads (24.61%, 7.14%, 55.48%).
What does a low and what does a negative spread mean? How do I interpret this?