Financial Metrics of a LIC

When looking at the financial metrics of a LIC on CommSec’s “Financial” screen I often come across negative numbers for, eg. ROE, POR. What am I to make of this to better understand the LIC?

 

A: I would ignore both.

As they are an investment company, the only important measure (assuming that the investments can be readily liquidated and the liabilities can be readily discharged) is the net tangible asset backing – and its relationship to the current share price.

Most LICs aren’t allowed to borrow, and have no long term liabilities.

regards


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