Starhub’s ROE is 249%
To first get a sense of how leveraged Starhub is, one can look to its insanely high return on equity (ROE). Typically, ROE of above 20% is considered impressive. Starhub’s 249% in its last financial is way above the curve and in 2011, its ROE was 1396%. How does ROE related to the degree of leverage? The answer lies in the Dupont analysis which breaks down ROE into 3 constituents:ROE = Profit Margin x Asset Turnover x Leverage
Simply put, the higher the leverage employed by a company, the higher the ROE will be, assuming profit margin and asset turnover remains constant. The crucial thing is that the degree ......