Return on equity = Net Profit Margin x Asset T

INTERPRETATION = (Net Income / Sales) x (Sal

Net Profit Ratio of SBI is 1.202 which is higher than Net Profit
Ratio of HDFC Bank (1.177). This implies that SBI is able to
generate higher profits with low amount of Sales i.e.
advannces given. HDFC has higher Asset Turnover Ratio
which means that the company is making large number of
sales in terms of advances.

Moreover, HDFC bank is less risky in terms of default because

it has lower Financial Leverage.

Net Income/sales
Sales/Total Assets
Total Assets / Total Equity
y = Net Profit Margin x Asset Turnover Ratio x Financial Leverage(Equity Multiplier)

= (Net Income / Sales) x (Sales /Average Assets) x (Average Assets / Average Equity)

SBI
Net Income 2109791679
Sales(Interest Earned) 1755182404
Total Assets 27059663041
Average Assets 25317919216
Total Equity 1882860626
Average Equity 1662802493
Net Profit Margin 1.202 Net Income/sales
Assets Turnover Ratio 0.069 Sales/Total Assets
Financial Leverage 15.226 Total Assets / Total Equity
 HDFC
Net Income 1 816024568
Sales(Interest Earned) 1 693059578
Total Assets 1 8638401917
Averge Assets 1 8023181323
Total Equity 1 894623507
Average Equity 1 810700577
Net Profit Margin 1.177
Assets Turnover Ratio 0.086
Financial Leverage 9.897