Can you help me with a paragraph to analys of this company d

Can you help me with a paragraph to analys of this company data - Thank you

Date

ROE

Net Profit

Asset turnover

Leverage

12/31/2017

23.73

4.85%

.63

7.39

12/31/2016

15.90

3.03%

.66

8.16

12/31/2015

27.59

4.93%

.69

7.85

10 yr bond2.83

Solution

(1) ROE of 27.59 % in 2015, droped to 15.90% during 2016. This is due to 1.90% ( 4.93 - 3.03) fall in the Net profit ratio. When the company is highly levered, a small change in Net profit ratio can lead to a large change in ROE. During the leatest year Net profit ratio improved to 23.73% which again due to the improvement in Net profit ratio. Thus a comparative analysis between ROE and Net profit ratios indicate high sensitivity of ROE to Net profit.

(2) Ratio of more concern to the company is Assets turnover ratio. A ratio below 1 is of no sence for any type of entity. Hence company should look forward to improve its sales by entering new markets. Because, it cannot try with decreasing the selling price, because it can adversly effect the Net profits and ultimately the ROE. ( As already observed in ...... (1) above )

(3) Company was put in high gear, because a leverage ratio ( debt / equity) araount 8 times is very high for any kind of industry. So company should look at long term sustainability by issue of common stock and redeem some part of debt in the company. It may decrease the ROE but saves the firm from financial risk.