roe - on its own, it can mislead badly, page-3

I can relate to highly leveraged companies being poor investments in spite of other seemingly-good metrics like ROE, but I cannot conceive of the opposite of this - namely, a poor ROE in a quality-investment company, even if it has no debt.

As a rule, I agree with much that you write. On the matter of companies regularly seeking funds, whether from investors or lenders, my view is that after a relatively short history, companies should throw off enough cash to fund expansion, and pay their original investors a dividend. For instance, if a company makes 20% ROE on its original capital and retained earnings, it can keep half to fund growth, and give half back as dividends. When companies grow much faster than about 10% a year, they often get indigestion.

As you would know, ROE can hide behind other rule-of-thumb valuation methodologies. For instance IV = Book Value x ROE/RRR is the same as IV = EPS/RRR. As you wrote, and have written before, debt levels, cash flow, past capital raisings, management calibre and honesty, plus other factors have to be considered.

Even debt itself needs to be understood, because some debts are less toxic than others. For instance, if one runs a mortician business, and prepaid funerals are reflected in a high gearing ratio, it may not portend financial disaster, particularly if a good proportion of the prepayments are "forgotten" or foregone for various reasons. HP commitments are not as bad as money borrowed to pay wages or tax, etc, etc.