Financial management

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prudhvi krishna reddy

prudhvi krishna reddy (Querist)
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27 August 2011 analysis return on equity vs return on assets

vignesh

vignesh (Expert)
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31 August 2011 Return on equity means the profit which is earned with the help of the capital employed in the company. and the return of asset means the percentage of profit which is compared with the fixed assets.

For eg. the Share Capital is Rs.5,00,000 and the fixed assets is Rs. 10,00,000 and the company earned Rs. 2,50,000 as their profit.

The Return on Equity is 50% (Profit/Share Captial * 100) and the Return on Assets is 25% (profit/ FA *100)