Leading stock exchange BSE today said it has added new criteria to calculate return on equity as well as leverage ratios for S&P BSE Quality index's stocks.
The index is operated by Asia Index -- an equal venture between S&P Dow Jones Indices LLC and BSE.
"Additional details have been added to the winsorization methods for the ROE (return on equity) and Leverage ratios, which are components of each stock's quality score," BSE said in a circular.
Winsorisation limits extreme values in data to reduce the effect of possibly spurious outliers.
S&P BSE Quality index measures the performance of the 30 highest quality companies in the S&P BSE LargeMidCap, based on their quality scores.
"If the underlying data points for a given stock's ROE ratio are both negative, leading to a positive ROE, its value will be set as equal to the value of the 2.5 percentile ranked security," BSE said.
"For the leverage ratio, if the value is negative it will be set as equal to the value of the 2.5 percentile ranked security," it added.
The changes would be applicable in September, when the rebalancing of the index takes place.
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