Return on Equity: Analysis of Financial Stability of 5 Companies

Running Head: RETURN ON EQUITY
Return on equity
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2RETURN ON EQUITY
Table of Content
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

3RETURN ON EQUITY
Introduction
To ascertain the financial position of a business concern the things that is to be known or
calculated more certainly is the ROE or the company which is also known as the Returns on
equity. After analyzing the balance sheet of 5 different companies and doing certain calculation
based on the formulae of ROE some conclusions are done which ascertains the financial
positions of the 5 companies whose balance sheets are being analyzed (Elzinga et al.2015).
Discussion
As per the 1994 balance sheet of Boston Beer Company, Anheuser Company and Coors
Company the sales are $ 128077, $13733 and $2040330 respectively and their net income are
$9085, $1707 and $104220. These values are the requirement to find out the returns on equity
(ROE). The formula used for ROE is: Net income/ Average of shareholders security. The
companies average share holders security are $7727, $7488 and $653064 respectively. On
calculating keeping the above formula in mind it is seen that the Boston Beer Company has the
highest ROE in comparison to all 5 companies whose data’s are being analyzed.
The ROE structure of all 5 companies according to the comparison are as follows:
 The Pete’s company ROE is 71.57
 The Redhook Company’s ROE is 15.75
 The Boston Beer Company’s ROE is 117.57
 The Anheuser Company Has its ROE to be 22.80
 The Coors Company’s ROE is15.96