Westpac Group And National Australia Bank: Ratio Analysis

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

Return on equity tells you how effectively a company is using the dollars invested in it by stockholders. ROE is the most often quoted single statistic when describing a firm 's performance. It is also one of the statistics considered to be most useful by stockholders.

* 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.

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

The following report is a brief comparative analysis of two of Australia’s largest deposit-taking financial institutions (FI), Australia and New Zealand Banking Group Ltd. (ANZ) and Westpac Banking Corporation (Westpac). This report seeks to identify which of the FIs has a greater aggregate return per dollar of equity and thus establish the highest performer, or most profitable, of the two. The Return on Equity Model (ROE) (Koch & MacDonald,

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.

Ratio analysis is a very useful tool when it comes to understanding the performance of the company. It highlights the strengths and the weaknesses of the company and pinpoints to the mangers and their subordinates as to which area of the company requires their attention be it prompt or gradual. The return on shareholder’s fund gives an estimate of the amount of profit available to be shared amongst the ordinary shareholders; where as the return on capital employed measures an organization 's profitability and the productivity with which its capital is utilized. Return on total assets is a profitability ratio that measures the net income created by total assets amid a period.

The Gross Margin ratio represents the percent of total sales revenue that TCI retains after incurring the direct costs associated with producing the goods and services sold by them. It helps us distinguish, as much as possible, between fixed and variable costs. With a 20%, 15%, or 10% projected increase in sales, for 1996, we calculated TCI’s GM ratio to be 41.85% , and in 1997 to be 41.84%. This means that around 42% of TCI’s sales dollar is available to pay for fixed costs, like its potential long-term debt to MidBank, and to add to profits.

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

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

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)

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 .

Banking and financial institutions are central to the survival of any economy and are highly regulated due to their intermediation and asset transformation roles. Banks strive to remain profitable and in the process are exposed to risk. Various profitability and risk metrics have been in use to evaluate the performance of banks but the 2007/2008 financial crisis has changed the way stakeholders in the financial industry assess profitability and risk performance of banks.

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

* As a percentage-return measure, ROA is comparable to cost-of-capital and market rate of return measures.