Sample Thesis Paper
Return on Equity (ROE is a profitability ratio that shows how successful a company has been in making profits, but in this case the profits are a proportion of total common share holders’ equity rather than total assets. Profit after taxation is divided by total common equity and the result is ROE which is expressed as a percentage. The total equity that represents common share holders includes the share capital and the reserves and the un-appropriated profit for the company. This is the denominator in the calculation for ROE.
ROE for MCB bank was 29.43% in 2008, a sharp decrease of 12.45% from last year when ROE was 33.61% in 2007. This shows that ROE fell by a margin but can be classified as being relatively stable over the two years 2007 and 2008 keeping in view the global capital market crisis. In comparison, HBL’s ROE rose by a little margin to 24.38% in 2008 from 22.65% per cent in 2007. This is a increase of around 7.60% and shows that return for common equity share holders has increased over the two year period. Again the ratios of MCB are superior to those of HBL.