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COMMENT AND SUGGESTION

PROFITABILITY RATIO

1. Return on Asset
The return on asset (ROA) is the ratio that shows the percentage of how profitable a company’s

assets are in generating revenue. A high ROA indicates that management is effectively utilizing
the company’s asset to generate profit. Based on the above calculated table ratio, Sun Life

Insurance Company recorded a better ROA which is 5.86% compared to AIA Insurance Company
that recorded only 1.80% of ROA. From that graph, it shows that Sun Life Insurance Company
generate profit from total asset better than AIA Insurance Company. So, AIA Insurance Company

can increase its net profit. For example, the company could increase total sales for the period,
then net income will increase accordingly. By decreasing the total assets also can improve the
ROA.

2. Return on Equity
ROE is considered a measure of how effectively management is using a company’s assets to
create profits. A higher ROE percentage indicates that shareholders are receiving a better return

on their investment. Based on the above calculated table ratio, the ROE of AIA Insurance
Company is lower that Sun Life Insurance Company which is 22.16% compared to AIA Insurance

Company only get 19.29%. Meaning by that, Sun Life Insurance Company generate better profits
from its shareholders investment. A declining ROE could be a red flag for an investor since the
company may be experiencing business problems and the suggestions to improve ROE is by

improving the asset turnover because it measures the company’s efficiency. Hence, the more
sales a company produces relative to its assets, the more profitable it should be, and the higher

return on equity it should earn.

LIQUIDITY RATIO

1.Debt to Equity Ratio

The debt to equity ratio is used to evaluate a company’s financial leverage. It is a measure of the
degree to which a company is financing its operations through debt versus wholly owned funds.
It reflects the ability of shareholder equity to cover all outstanding debts in the event of a business

downturn. Based on the above calculated table ratio, it shows the different percentage between
AIA Insurance Company and Sun Life Insurance Company. 9.70% is recorded by AIA Insurance

Company while 2.78% is for Sun Life Insurance Company. A higher ratio will be riskier. By

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