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The following chart shows the returns on average equity for two companies over a decade. Returns on Average Equity Each company begins in the same spot, yet one begins an inexorable decline while the other maintains enviable performance. High and sustainable returns on equity are desirable and are one indicator of a business with a competitive advantage, so . . . Accretive is a term used to signify a transaction (often an acquisition, but not necessarily so) that is expected to increase a financial metric. The metric most often referred to is earnings per share. Companies often like to focus on how accretive their transactions are, putting the expected accretion up front in press releases, conference calls and investor presentations. The problem with accretion is that is glosses over far more relevant metrics and make bad . . . |
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