The specific target of measurement depends on the nature of the business using it. However, users should beware. The specific target of measurement depends on the nature of the business using it. The nature of the trading business is arbitraging through the use of derivatives.
Arbitrage employs speculation and is therefore extremely risky.
In the automobile financing business, our analytical needs differ from those of a trading operation. As lenders, we make money by managing a net interest margin, not purely by speculating on the direction of interest rates. Accordingly, the market value of our assets does not fluctuate as widely as does a trading operation's asset values. Earnings, however, are vital to any profit-seeking enterprise. After all, in the world of finance, market value of equity is the present value of future earnings.