PBT, Assets and Liabilities

#1
If a company's revenue and profit before tax have increased(e.g., CAGR of 8%) for last 4 years, but difference between total assets and total liabilities has decreased by a higher percentage(CAGR of 10%) for the 4 years but still positive, what would say about the financial health of the company?
 

cinderblock

Well-Known Member
#2
TA-TL = Shareholder's Equity (SE)

If the difference between TA and TL has decreased it means SE (Eq+Reserves) has decreased.
SE going down with increasing profits can mean 1 of 2 things.
1. Co. is buying back shares
2. Dividend are increasing at a faster rate than profits.

Not much to worry about.
 
#3
TA-TL = Shareholder's Equity (SE)

If the difference between TA and TL has decreased it means SE (Eq+Reserves) has decreased.
SE going down with increasing profits can mean 1 of 2 things.
1. Co. is buying back shares
2. Dividend are increasing at a faster rate than profits.

Not much to worry about.
Thanks a lot for the quick reply ... Appreciate your knowledge sharing
 

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