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Return on Equity Measures

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Added on  2019-10-01

Return on Equity Measures

   Added on 2019-10-01

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Ratio AnalysisRatio Analysis1 | Page
Return on Equity Measures_1
Ratio AnalysisTable of ContentsRatio Analysis:.......................................................................................................................................3Common Size Income Statement..........................................................................................................7References:............................................................................................................................................92 | Page
Return on Equity Measures_2
Ratio AnalysisRatio Analysis:Return on Equity (ROE)2016201520142013Profit407 2,440 16052128Equity22,949 24,781 2598726022ROE1.77 9.85 6.18 8.18 Return on equity measures how much company is earning on equity provided by itsshareholders. In the case of Wesfarmers Limited Return on equity of the company isincreased in the year 2015 but later on decreased in the year 2016. There is major decline inthe year 2016 due to impairment of the assets of the company. There is no cash loss to thecompany. Return on Asset (ROA)2016201520142013Profit407 2,440 16052128Assets40,783 40,402 3972743155ROA1.00 6.04 4.04 4.93 Return on Assets measures the return on capital invested into the assets. How much thecompany is earning on the assets by utilizing them. Return on assets of the company isincreased in the year 2015 as compared to 2014 but later on showing a sharp decline in theyear 2016 due to impairment of the assets. Return on Assets of the company in the year 2016is 1% as compared to last year 6.04%.Asset Turnover/Operating Efficiency2016201520142013Sales/Revenues65,981 62,447 6018157749Assets40,783 40,402 3972743155 Asset Turnover1.62 1.55 1.51 1.34 Assets Turnover presents how much time assets has routed in the form of sales. High assetsturnover is feasible for the company. In case of Wesfarmers Limited Assets turnover of the3 | Page
Return on Equity Measures_3

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