Question: I am using two profitability ratios ROA and ROE to find a conclusion of two company's profits over the past three years.I am confused as
I am using two profitability ratios ROA and ROE to find a conclusion of two company's profits over the past three years.I am confused as to what it means based off these to ratios which company is doing better and why or why not.
RETURN ON ASSETS
Company X
End of December (12/31) TTM Net Income Total Assets ROA
2019 $3.73B$27.73B17.43%
2018 $3.03B$19.98B15.36%
2017 $4.38B$18.52B28.45%
Company Y
End of December (12/31) TTM Net Income Total Assets ROA
2019 $0.24B$3.92B6.36%
2018 $0.23B$3.46B6.86%
2017 $0.27B$3.94B8.08%
RETURN ON EQUITY
Company X
End of December (12/31) TTM Net IncomeShareholder's Equity ROE
2019 $3.73B$-6.76B-66.68%
2018$3.03B$-2.88B 172.79%
2017$4.38B$5.76B 77.33%
Company Y
End of December (12/31) TTM Net Income Shareholder's Equity ROE
2019$0.24B$-0.59B -37.86%
2018$0.23B$-0.71B -29.29%
2017$0.27B$-0.26B -147.89%
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
