Key Metrics – Retained Earnings To Market Value

Key Metrics - Retained Earnings To Market Value by Chris Gilbert

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Introducing the Key Metrics series, we take a look at Retained Earnings to Market Value. I want to explain exactly what retained earnings are, what they can show us, and why they can be telling of management. Then we'll analyze why Warren Buffett likes to compare retained earnings growth to market value growth.

When seeking out potential investments we're obviously looking for profitable, successful companies. After all, making profits and delivering them to shareholders should be in the top tier of a company's priorities. But a concept that's...