Thesis: Return on Assets

Sample Thesis Paper

The Return on Assets (ROA) ratio like ROE is also a measure of profitability to assess the performance of a company. It is used by both managers and investors alike. The Profit after Taxation or Net Income is divided by the Total Assets of the company for the period and expressed as a percentage.

The ROA for MCB Bank for the year 2008 was 6.82%, up from 6.63% per cent in 2007. This shows that MCB bank has improved the utilization of its assets in generating profits for the share holders of the company. In contrast, HBL had an ROA of 5.80% in 2008 which also was an increase from 4.81% in 2007. These figures show that both MCB’s and HBL’s return or profitability as a proportion of its assets has increased in the year 2008 however the increase is lower for MCB. Comparatively, MCB has a higher return on assets ratio and the managers of MCB have been more successful than the managers of HBL in generating profits and using its assets effectively and efficiently towards generation of the profits for the company.

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