3. RATIOS (ROA ROE ROS) 3.1 Definition.
· Return of assets (ROA): this ratio, is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. The return of assets is calculated by dividing the net income of the company in one year by the total assets of that same year. Expressed in percentage net incometotal assets
· Return of equity (ROE): this ratio, measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. ROE is calculated by dividing the net income over the total equity on the company. Expressed in percentage. net incometotal equity
· Return of sales (ROS): this ratio is used to evaluate a company's operational efficiency. This measure is helpful to management, providing insight into how much profit is being produced per dollar or euro of sales. The return of sales is calculated by dividing the net income before taxes and interest over the total sales. Expressed in percentage. net income (before taxes and interest)total sales 3.2 Heineken ROA ROE ROS.
All the values are in millions of euros, excepted for the percentages. 1. ROA: the net income in 2014 for Heineken was 1516 million euros, and the total assets were 34348 million euros.
151634348*100=4.41%
Last year’s return of assets for Heineken was 4.41%. 2. ROE: the total equity in 2014 for Heineken was 11402 million euros.
151611402*100=13.3%
Last year’s return of equity for Heineken was 13.3%. 3. ROS: the net income before taxes and interest in 2014 was 2440 million euros and the sales were 19257 million euros.
244019257*100=12.6%
Last year’s return of sales for Heineken was