The management of Holly Polly Printers Limited is concerned about the decline in the return on equity

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The management of Holly Polly Printers Limited is concerned about the decline in the return on equity of the company over the last three years notwithstanding significant improvement in profits over the same period of time. You are required to calculate the ROE of the company and identify the key reason for the declining trend on the basis of the following information:

Particulars Profit after tax Sales Non-current assets Current assets Shareholders' funds 2017 740 1,980 1,780

On the basis of your analysis, make suggestions to the management for improvement.

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Financial Accounting For Managers

ISBN: 9789352868339

3rd Edition

Authors: Sanjay Dhamija

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Question Posted: Dec 08, 2023 01:13 AM

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The management of Holly Polly Printers Limited is concerned about the decline in the return on equity

Question:

Particulars Profit after tax Sales Non-current assets Current assets Shareholders' funds 2017 740 1,980 1,780 3,170 3,120 (in Million) 2016 610 1,620 1,540 2,280 1,690 2015 425 1,100 1,220 1,200 970

Step by Step Answer:

To calculate the Return on Equity ROE and analyze the declining trend well use the formula for ROE which is ROE Net Income Average Shareholders Equity ...View the full answer

Financial Accounting For Managers

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