Maaden: Analytical study on return on equity performance

The average return on equity increased from 1.66 to 2.83 percent, as a result of the increase in return on net operating assets(RNOA) from 1.57 to 2.69 percent which is supported mainly by the rise in Net operating profit margin(NOPM) because of the rise in gross margin. Although the RNOA was greater than NBC but the yielded operating spread was very narrow, that is why the FLEV effects were limited. Thus, the contribution of Non-operating activities confined only to 0.14.
The company`s Net operating profit margin(NOPM) which measures the efficiency of profitability increased from 10.25 to 20.64 percent in the last TTM, mainly due to the increase in gross profit margin. Thus, for each riyal of sales the company earns about 0.21 riyal after all operating expenses and tax.
On the other hand, Net operating assets turnover (NOAT) which measures the efficiency of productivity of the company`s net operating assets, decreased from 15.32 to 13.04 percent by the end of June 2017 on the impacts of the decline in sales revenue and the growth in Net operating assets(NOA) as well. This result means that, for each riyal of net operating assets, the company yields about  0.13 riyal of sales.

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