The perils of return on equity

Investors have just lost a bundle on engineering company Forge Group as it skirts with bankruptcy due to massive losses suffered on two major projects. This is typical of the contract engineering and mining services industries, as I learned the hard way nearly 20 years ago after making one of my first ever investments in contracting company Eltin Limited, which was eventually acquired by Leighton.Search the internet and you’ll find plenty of ‘analysis’ cheering on Forge’s management, the company’s conservative balance sheet and its high return on equity. Many seemed to think the company could continue to reinvest at extremely high...

Investors have just lost a bundle on engineering company Forge Group as it skirts with bankruptcy due to massive losses suffered on two major projects. This is typical of the contract engineering and mining services industries, as I learned the hard way nearly 20 years ago after making one of my first ever investments in contracting company Eltin Limited, which was eventually acquired by Leighton.

{{content.question}}

Mastercard

{{ twilioFailed ? 'SMS Code Failed to Send…' : 'An SMS verification code has been sent ...' }}

Hi {{ user.FirstName }}

Looks like you have already taken a free trial

Please enter your payment details

We have sent you a code via SMS to {{user.DayPhone}}

please enter this code below to complete your SMS verification

We cannot send you a code via SMS to {{user.DayPhone}}

If you didn't receive SMS code please

SMS code cannot be sent due to: {{ twilioStatus }}

Please select one of the options below:

Looks you are already a member. Please enter your password to proceed

Please untick this box when using a public or shared device


Verify your mobile number to proceed…

Please check your mobile number below and press the Send Verification Code button. This will be used to complete your verification in the next step.

Please sign up for full access

Mastercard

Updating information

Please wait ...

Trial

Mastercard
{{ productPrice }} / day
( GST included )
Price $0
GST $0
Discount -{{productDiscount}}
TOTAL {{productPrice}}
  • Mastercard
  • Visa

Please click on the ACTIVATE button to finalise your membership

Mastercard

The email address you entered is registered with InvestSMART.

Please login or select "Don't know password"

Please untick this box when using a public or shared device


Register as a new member

(using a different email)

Related Articles