Appendix_2A

Appendix_2A - Confirming Pages Appendix 2A Appendix...

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Appendix 2A Financial Statement Analysis Using a Return on Equity (ROE) Framework 1 Appendix 2A Financial Statement Analysis Using a Return on Equity (ROE) Framework Between 1992 and 2003 the commercial banking industry experienced a period of record profits. This was quite a change from the late 1980s and early 1990s, when banks were failing in record numbers. Despite record profits, many FIs have areas of weakness and inefficiency that need to be addressed. One way of identify- ing weaknesses and problem areas is through an analysis of financial statements. In particular, an analysis of selected accounting ratios—ratio analysis—allows FI managers to evaluate the current performance of an FI, the change in an FI’s per- formance over time ( time series analysis of ratios over a period of time), and the performance of an FI relative to competitor FIs ( cross-sectional analysis ±of±ratios± across a group of FIs).
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Appendix_2A - Confirming Pages Appendix 2A Appendix...

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