Chapter 4-table 11: Do financial statements help in Financial decisions and corporate valuation

Table 11: Distribution of Return on Equity by period
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Bank------------------------2004-------2005------2006------2007------2008
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1. Compass Group PLC------0.073------0.087------0.124-------0.240-------0.203

2. Toronto Dominion Bank-0.148-------0.135------0.235-------0.192-------0.124

3. Harris Corp----------------0.104-------0.141------0.143-------0.252-------0.195

4. Morgan Stanley------------0.161-------0.169------0.239------0.103-------0.034

5. Boeing Co------------------0.166-------0.233-----0.467-------0.452--------2.138
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Table 11 shows the distribution of Return on Equity of the selected banks of the United State of America by period. It is notable that all of the banks have an increasing return on equity from 2004 to 2007 and decreased in 2008. It is also notable that the Return on equity is higher than the return on assets which means that the banks used their equity values for investment. This further implies that each bank added financial risk to itself, but, enhances residual earnings whenever the rate of return on assets exceeds the cost of debt.