Q-ratios and the target return on equity for utilities
Journal Article
·
· Public Util. Fortn.; (United States)
OSTI ID:6860213
An index of profitability derived from the economic theories of efficient markets and resource allocation is useful in the analysis of utility rate of return adequacy, emphasizing the value of utility investments relative to those in other industries. Comparison of this index (the Q-ratio) for a given utility with a nonregulated benchmark ratio is presented here as a method of clarifying investor perceptions of regulatory limits on rate of return to utility capital. In this, the second of two articles, the author provides an example of the application of Q-ratio theory and comments on what adjustments in market price per share and level of return on equity may be necessary to achieve parity with investment in an unregulated environment. 3 footnotes and references.
- Research Organization:
- Angelo State Univ., San Angelo, TX
- OSTI ID:
- 6860213
- Journal Information:
- Public Util. Fortn.; (United States), Journal Name: Public Util. Fortn.; (United States) Vol. 113:8; ISSN PUFNA
- Country of Publication:
- United States
- Language:
- English
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