Revenues have also increased each year since 2008, as has net income, return on equity, return on assets, operating margins, and net margins.

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And although industry profits have hitherto been capped at a government-mandated 12% return-on-net-assets and operations have been restricted by state controls on crude imports and retail prices, those regulations will be lifted gradually starting April 1.

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They remain too bearish regarding the return on equity for the big players as regulators elongate dates for compliance on net tangible assets per share, liquidity percentages and other restrictive yardsticks.

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The higher the return on capital which he defines as pretax operating profit divided by the sum of net working capital and net fixed assets the more effectively a company is using its capital to generate profit.

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In addition, CSCO has several signs of high-quality management: a top quintile return on invested capital ( ROIC) of 18%, few asset write-downs (less than 10% of net assets), and a compound annual growth rate for NOPAT of 26% over the past 10 years.

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