AdvancedMAD Academy0:46Valuation

The Question That Ranks Businesses

Returns on equity, assets and invested capital ask how well a company turns money into more money — and only one of them resists leverage.

0:46 · 6 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00A great business turns a dollar of capital into more than a dollar.
  2. 0:05The three measures. Each divides profit by a different definition of the money put in.
  3. 0:14The leverage trap. Borrowing shrinks equity, so return on equity rises without the business improving.
  4. 0:24Why ROIC is the honest one. It counts debt as capital, so it cannot be improved by borrowing more.
  5. 0:33The comparison that matters. Returns above the cost of capital create value. Below it, growth destroys value.
  6. 0:41Compare the return to the cost of the capital behind it.
MAD AcademyYou hold No active plan

This section is part of MAD Academy

The whole course, with live boards to practice on. Learn the market properly.

What Academy includes

  • Every training video the plan opens, all 305 lessons across 20 subjects
  • A Start Here path for newcomers, and every subject's lessons in order from Foundations to Advanced
  • Your progress, your trophies and your next lesson, tracked on your own Academy home
  • Every concept guide, all 24 trading set-ups and the 151-term glossary
  • The real-time Market Dashboard, Premium Scanner and Pro Charting, on the same feed every member plan reads
  • Heatmap and sectors, inside the member platform with your lessons rather than beside it
  • Unlimited watchlists, in the drawer on every tab and on the scanner and chart
  • The real-time Market News Feed, narrowed to your own watchlist in one click

Not included

  • No premium alerts, MAD Setups, alert archive or performance record
  • No personalized dashboard: My Dashboard starts at Analysis Tools Only
  • No research desk: Corporate Events and Institutional Ownership start at Analysis Tools Only
  • No product tutorials or Deep-Dives, which come with Premium Membership
  • No MCP Connector: connecting an AI app starts at Analysis Tools Only

Add MAD Academy

$39per month

or $279 per year (about $23.25 a month)

Start MAD AcademyPay yearly instead

Or get both

Premium Membership

$0for 5 days

then $149 per month, or $1,099 per year. Tools and Alerts together cost $188 a month bought separately.

Start 5 days free

Card required. After 5 days it is $149 per month or $1,099 per year until you cancel. First-time members only.

Compare every plan on the pricing page
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
The Question That Ranks Businesses — MAD Academy Training Video · MadStockAlerts