Scribd Logo
Upload

Welcome to Scribd!

  • 4 views

    I. Assets Utilization: ROA TR/TA (Assets Utilization) - Total Expense/TA (Expense Ratio) - Taxes/TA (Tax Ratio)

    Uploaded by

    Joele sh
    ROE decreased from 2013 to 2014 due to a decrease in ROA. ROA decreased because asset utilization decreased, as revenues increased but total assets increased more, leading to a lower revenue/assets ratio. Several factors influence ROA, including revenues, expenses, taxes, and asset utilization, which is composed of interest income ratio, non-interest income ratio, and service/other gains ratio. The document analyzes these factors and finds that while interest income increased slightly from 2013 to 2014, total assets increased more, resulting in a small decrease in the interest income/total assets ratio, contributing to the overall decrease in asset utilization and ROA.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    I. Assets Utilization: ROA TR/TA (Assets Utilization) - Total Expense/TA (Expense Ratio) - Taxes/TA (Tax Ratio)

    Uploaded by

    Joele sh
    4 views2 pages
    ROE decreased from 2013 to 2014 due to a decrease in ROA. ROA decreased because asset utilization decreased, as revenues increased but total assets increased more, leading to a lower revenue/assets ratio. Several factors influence ROA, including revenues, expenses, taxes, and asset utilization, which is composed of interest income ratio, non-interest income ratio, and service/other gains ratio. The document analyzes these factors and finds that while interest income increased slightly from 2013 to 2014, total assets increased more, resulting in a small decrease in the interest income/total assets ratio, contributing to the overall decrease in asset utilization and ROA.

    Original Description:

    Original Title

    EM didn

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    ROE decreased from 2013 to 2014 due to a decrease in ROA. ROA decreased because asset utilization decreased, as revenues increased but total assets increased more, leading to a lower revenue/assets ratio. Several factors influence ROA, including revenues, expenses, taxes, and asset utilization, which is composed of interest income ratio, non-interest income ratio, and service/other gains ratio. The document analyzes these factors and finds that while interest income increased slightly from 2013 to 2014, total assets increased more, resulting in a small decrease in the interest income/total assets ratio, contributing to the overall decrease in asset utilization and ROA.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    4 views2 pages

    I. Assets Utilization: ROA TR/TA (Assets Utilization) - Total Expense/TA (Expense Ratio) - Taxes/TA (Tax Ratio)

    Uploaded by

    Joele sh
    ROE decreased from 2013 to 2014 due to a decrease in ROA. ROA decreased because asset utilization decreased, as revenues increased but total assets increased more, leading to a lower revenue/assets ratio. Several factors influence ROA, including revenues, expenses, taxes, and asset utilization, which is composed of interest income ratio, non-interest income ratio, and service/other gains ratio. The document analyzes these factors and finds that while interest income increased slightly from 2013 to 2014, total assets increased more, resulting in a small decrease in the interest income/total assets ratio, contributing to the overall decrease in asset utilization and ROA.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 2

    EM didn’t change from 2013 to 2014 and remained constant at a multiplier of 11.1.

    However,

    ROA (2014) is less than ROA (2013). Therefore, the decrease of ROE is mainly due to low

    ROA.

    ROA is a broad concept that depends on many factors such as revenues, expenses and taxes.

    ROA= TR/TA (assets utilization) – Total Expense/TA (expense ratio) – Taxes/TA (tax ratio)

    I. Assets utilization

    AU TOTAL YEAR

    REVENUES

    6.25% 2013

    2,464,145

    6.11% 2,578,239 2014

    Table 4: AU

    As we can see in table 4 above, asset utilization decreased from 2013 to 2014 which

    partially explains the decrease of ROA and in turn ROE. To see what factor or ratio that

    pushed asset utilization to be low in 2014 and high in 2013, we should decompose it

    more.

    AU=Int. income/TA +Non int. income/TA + SG/TA.

    First: interest income ratio

    2014 2013  

    5.113% 5.112% interest income/total assets

    Table 5: interest ratio


    Interest income increased slightly from 2013 to 2014 however AU decreased from 2013 to 2014.

    Therefore, it didn’t have any clear impact on AU and then ROA.

    To see how the company is operating regarding its interest income, we should evaluate three
    factors that influence how much the bank is generating income from his assets, the three factors

    You might also like