Westpac Group And National Australia Bank: Ratio Analysis

* Return on assets (ROA) – ROA shows how successful a company is in generating profits on the amount of assets they own. Since assets consist of debt and equity, ROA is a measure of how well a company converts investment dollars into profit. The higher the percentage, the more profit a company is generating per dollar of investment. Similar to ROS, this ratio needs to be looked at compared to the industry as different industries have different requirements that can affect ROA. For example, companies in the airline and mining industries need expensive assets to operate so will have lower ROA’s compared to companies in the pharmaceutical or advertising industries.

ROA is considered the best overall indicator of the efficiency of assets used in a company. Home Depot and Lowe’s ROA ratio both moved down due to the downturn in the industry but Home Depot was able to improve 2010.

The Return on Assets ratio is a basic measure of the efficiency with which TCI allocates and manages its resources (assets) to generate earnings. With a 20% projected increase in sales, for 1996, we calculated TCI’s ROA to be 12.95%, and 12.11% for 1997. Although this isn’t an extremely high ROA, TCI will be allocating its resources very wisely with the expansion of its central warehouse. If MidBank lends them the cash they need to complete this project, their central warehouse will be able to hold more tires for their increasing sales, which will then convert into profit. A true test of TCI’s ROA will be after 1998, when the warehouse is complete, so you can see just how well they can convert an investment into profit.

ANZ’s 2011 EM was 15.62x, slightly higher than Westpac’s 15.35x, suggesting ANZ’s assets are funded by more debt than Westpac, this combined with lower returns is usually indicative of a low-performing institution (Koch & MacDonald, 2010, pg. 122). Further decomposition leads to analysis of the Expense ratio (ER) and Asset Utilisation (AU).

RETURN ON ASSETS (ROA) Formula Description: You determine return on assets by dividing net profit by your total asset base. What Does Return On Assets Tell You?

Rate of Return on equity measures a corporation 's profitability by revealing how much profit a company generates with the money shareholders have invested. It indicates how efficiently the business uses its investment funds. For Tesco, Rate of Return on Shareholders’ Fund has increased from 13.85% in 2004 to 14.91% in 2009. This shows an improvement of 1.06% in five years period. When one examines the Sainsbury’s Rate of Return on Shareholders’ Fund, there is an increase from 7.76% to 8.36%. There is a 0.6% growth in the Rate of Return on Shareholders’ Fund. In comparison with Tesco, Sainsbury’s Rate of Return on Shareholders’ Fund is lower. Shareholders earned 13.85% from their investment (measured in book value

Guide, the company’s Return on Average Equity (the definition of ROE used in scoring company performance) in Year

The return on equity (ROE) is a measure of how well a noble uses investment sacks of corn to generate a growth. It is calculated by dividing the net income by the average equity. Sihathor’s ROE was 6.758% (24,143 divided by 357,271.5). Pemsah’s ROE was 6.984% (18,395 divided by 263,397.7). Also calculated was the growth in assets, which is the ending assets divided by the beginning assets. Sihathor’s growth in assets totaled to 107.27% (389,086 divided by 362,700). Pemsah’s growth in assets totaled 111.65% (291,620 divided by 261,200). The final measure of the performance was the return on assets (ROA), which is found by dividing the net income by the average assets. The ROA tells the Chief Scribe how a noble’s assets generate revenue. Sihathor’s ROA totaled to 6.423% (24,143 divided by 375,893), while Pemsah’s ROA totaled to 6.655% (18,395 divided by

The ratios returns on investment (ROI) and return on equity (ROE) are two of the most popular measure of profitability of a company and, along

Historically, the Du Pont innovation of (ROI) calculations represents one of the most significant turning points in the history of modern accounting and management, (Hounshell, 1998 ). The 1920’s began the Du Pont system company with methods and calculations from leaders, owners, executives, etc. Furthermore, it was the beginning of the integration of financial accounting, capital accounting, and cost accounting. When it comes to return on assets (ROA), they are a (ROI) measure that evaluates the organization’s return or net income relative to the asset base need to generate the income, (Finkler, Ward, & Calabrese, 2013). The Du Pont Company has been the leader of industrial research. Throughout the years with companies emerging, Du Pont’s method was becoming more prominent with owners and executives needing a method for

First of all, return on asset (ROA) is a ratio used to measure how efficient a company generates profit using its assets, which is the invested capital. We noticed that HH’s ROA was increasing from 2006 to 2010. However, HH’s ROA for 2011 dropped dramatically from 18.41%(year

Most successful companies across the world use Return on Assets and Return On Equity to ascertain their financial well-being. ROA is a way that the management uses to determine whether its use of organizational assets is generating targeted assets. More so, ROE which is the Return Of Equity is calculated by the net income as a percentage of shareholders equity (Damodaran, 2007) Both ROA and ROE are increasingly being used by companies since it is a proven way to determine a company’s financial wellbeing. Among these companies is the UK Company Vodafone. Vodafone’s’ success has been attributed by a number of journals including Investopedia to its efficient use of ROA and ROE. Returns On Assets is being used to illustrate the rate of profits that is being earned on all the assets a company has regardless of the financing policy (Y Charts, 2016)

One of the most important profitability metrics is return on equity. Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity. It’s what the shareholders “own”. A business that has a high return on equity is more likely to be one that is capable of generating cash internally. For the most part, the higher a company’s return on equity compared to its industry, the better.

This ratio means how much the company earns before they paid their interest and taxes, this ratio helped to know how the bank can be more efficient in used their assets to generate profit before paying the obligation. The formula for this ratio is ROA=EBIT/Total assets. The figure below was calculated by NBAD, so as you can ROA was 1.51 in 2013 and continued increased in 2014 till it reached 1.59 in 2014, but the figure dramatically decreased till 1.34 in 2015. NBAD was stronger in 2014 as they generate high ROA compare it with the two years that help the bank to be more profitability and attract a lot of

There are several ways to measure a company’s earning and profitability. Return on Equity (“ROE”) and Return on Assets (“ROA”) are, historically, among the most widely used measures to assess relative profitability in the banking industry. The technique used in this paper is based on Dr. Cole’s ROE Model. This model helps “demystify” ROE and ROA; and focuses and analyzes the main factors that are driving profitability for a bank. For this paper, selected financial data for East West Bank (“EWB” or the “Bank”) and its Peer Group (“peers”) was obtained from the December 31, 2013 Uniform Bank Performance Report (“UBPR”) and various EWB documents ; and from interviews conducted with EWB management .