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To: Shane M who wrote (55744)	7/31/2015 1:02:41 PM
From: Graham Osborn	1 Recommendation Recommended By E_K_S Read Replies (1) \| Respond to of 78711

The theory of ROUNTA is quite attractive - basically you are taking ROA and excluding the effect of intangibles in both the numerator and denominator. Maybe I'm just paranoid from spending 2 weeks sifting through AGN's financials, but I can say there are accounting scenarios where this would be deadly, at least as standalone. The trouble is that amortization can be used as a waste bin for all sorts of deferred capitalized charges that have little to do with intangibles. In a case like AGN's, ROUNTA would substantially overestimate the underlying economic productivity of the business. I guess that's a complicated way of saying use it with a grain of salt, like anything else. EKS and I have debated before how valuable a GN is. Any situation where PB or PE might be artificially low, the GN will reflect that. I am extremely suspicious of GNs for all companies with record or near-record earnings (esp with debt or lotsa intangibles), as I would have been in the late 90s or 20s.