Accounting

On the basis of above ROE comparison, ARAMARAK firm is performing good in the industry as compared to the overall industry.

According to my view, there are following factors that may affect and drive the ROE of the company

· Net Profit Margin

· Net Assets

· Turnover

· Leverage ratio

· Asset Turnover

There are basically three parts of ROE

1. Return on Sales

2. Asset Turnover

3. Leverage

Factors that affect return on sales are

· Cutting production expenses

· Marketing which boosts the sales of the company

· Inflation rate can also increase the return on sales

Factors that affect asset turnover are

· Quantity of assets

· Quality of assets

· Revenue or Total Income

Factors that affect leverage are

· Debt

· Equity

· Interest Expense