ANALYSIS: The return on equity is marginally higher than the refum on total assets/capital employed. The reason is loan funds constitute a meager portion of total funds. In other words, the impact of financial leverage (use of debt to magnify the ROE) is negligible. P.6.19 The financial statistics pertaining to profitability of Asian Paints (India) Limited for years 1-6 are tabulated below: y25 (Amount is in crore) Particulars Year, March 31 2 3 5 6 EBIT 107.06 120.77 125.82 163.47 177 20 194.99 Interest 21.68 19.58 22.33 20.29 22.12 14.59 EBT 85.38 100.19 103.49 143.18 155.08 180.40 Tax provisions 30.00 33.00 24.00 45.75 49.50 66.09 EAT 55.38 67.19 79.49 97.43 105.58 114.31 Sales 938.11 1,046.80 1,158.38 1,383.55 1.526.01 1,659.72 Total assets 534.49 647.66 685.84 771.09 882.20 893.52 Average total assets (ATA) 591.07 666.75 728.46 826.64 887.86 Equity funds 226.41 260.50 304.51 357.41 411.20 410.56 Average equity funds (AEF) 243.45 282.50 330.96 384.30 410.88 Net fixed assets 194.28 256.68 306.87 333.29 382.95 375.76 Inventory (Finished goods) 72.66 81.60 86.58 106.50 114.50 88.26 Sundry debtors 66.92 80.74 79.95 86.67 121.65 118.96 Average fixed assets 225.48 281.77 320.08 358.12 379.35 Average inventory 77.13 84.09 96.54 110.50 101.38 Average debtors 73.83 80.34 83.31 104.16 120.30 From the above financial information, you are required to prepare a disaggregative analysis related to ROA and ROE (both on pre-tax and post-tax basis) and intrepret the results. ANALYSIS: The return on equity is marginally higher than the refum on total assets/capital employed. The reason is loan funds constitute a meager portion of total funds. In other words, the impact of financial leverage (use of debt to magnify the ROE) is negligible. P.6.19 The financial statistics pertaining to profitability of Asian Paints (India) Limited for years 1-6 are tabulated below: y25 (Amount is in crore) Particulars Year, March 31 2 3 5 6 EBIT 107.06 120.77 125.82 163.47 177 20 194.99 Interest 21.68 19.58 22.33 20.29 22.12 14.59 EBT 85.38 100.19 103.49 143.18 155.08 180.40 Tax provisions 30.00 33.00 24.00 45.75 49.50 66.09 EAT 55.38 67.19 79.49 97.43 105.58 114.31 Sales 938.11 1,046.80 1,158.38 1,383.55 1.526.01 1,659.72 Total assets 534.49 647.66 685.84 771.09 882.20 893.52 Average total assets (ATA) 591.07 666.75 728.46 826.64 887.86 Equity funds 226.41 260.50 304.51 357.41 411.20 410.56 Average equity funds (AEF) 243.45 282.50 330.96 384.30 410.88 Net fixed assets 194.28 256.68 306.87 333.29 382.95 375.76 Inventory (Finished goods) 72.66 81.60 86.58 106.50 114.50 88.26 Sundry debtors 66.92 80.74 79.95 86.67 121.65 118.96 Average fixed assets 225.48 281.77 320.08 358.12 379.35 Average inventory 77.13 84.09 96.54 110.50 101.38 Average debtors 73.83 80.34 83.31 104.16 120.30 From the above financial information, you are required to prepare a disaggregative analysis related to ROA and ROE (both on pre-tax and post-tax basis) and intrepret the results