Hi ! I'm analyzing the ROE of a company for two consecutive years:

Concerning The ROE - that measures the benefit of an organization, has earned with respect to the amount of equity investment thait its shareholders contribute - is good around 24% and improved of ~3% and it seemed largely driven by the Leverage ratio.

The Leverage (Assets/Equity) results in 1.8 and in 2013 it reduced modestly by ~1%:

• Total assets employed increased by 4.5%,
• Average Common Shareholders Equity increased by 5.8%,

It shows that roughly half of the companys assets has been used financed by equity.

The Interest Efficiency (Net Income/NOPAT) results in 0.95 and in 2013 it increased insignificantly by 0.2%:

• Net Income increased by 9.5%,
• NOPAT increased by 9%,
• Interest expense increased by 4%,

It shows the ability of the company to pay the interest expense on time and the company is generating enough income to pay the interest after paying taxes.

Do you think that my interpretation is correct and do you suggest to add/search for on the Financial statements ?

Waiting your reply

Thanks