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Strategies & Market Trends : Greenblatt's Little Book That Beats The Market
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To: Shane M who wrote (60)2/6/2006 10:33:38 AM
From: Stewart Whitman  Read Replies (3) of 218
 
I think that "Net Fixed Assets" generally includes things like long term assets & other assets, just not goodwill (for sure) and possibly other intangible assets.

Ideally, I think you would go thru & classify each asset on the balance sheet as to whether it requires an on-going investment of capital or not. For example, if the business has decided to move some of its cash into long-term bonds and these show up in the long-term asset category, then you probably wouldn't add them into the calculation. On the other hand, if a business is required to acquire distribution rights (intangible assets) as part of its business, then I think you would want to include them.

Generally I get numbers around 20% to 50% for large cap stocks. And I can come reasonably close to what is reported on the magic formula investing site.

Don't forget it's actually the relative ranking that is more important that the actual value of the ROC number.

Regards,
Stew
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