Essay about Case Study : Aetna Inc.

1180 Words Nov 15th, 2015 null Page
I have chosen to research Aetna Inc. “Aetna Inc. is a diversified health care benefits company that provides healthcare and related benefits, serving health care members, dental members, and group insurance customers” (Bloomberg L.P., 2015). “The Company offers medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities and health care management services for Medicaid plans” (Bloomberg L.P., 2015).

a) Return on Assets: Return on assets (ROA) is calculated by dividing a company’s net income by total assets and is expressed as a percentage. “ROA gives an idea as to how efficient management is at using its assets to generate earnings” and is “an indicator of how profitable a company is relative to its total assets” (Investopedia, LLC., nd.). The higher the percentage the better the company is at converting its investment into profits. Aetna’s RAO is “4.32%” (Morningstar, Inc., nd.). Aetna needs to improve on its return on assets. As this company continues into the future they need to make moves to ensure they are using their assets wisely.

b) Return on Equity: Return on Equity (ROE) is calculated by dividing a net income by shareholders equity and is expressed as a percentage. “Return on equity measures a corporation 's profitability by revealing how much profit a company generates with the money shareholders have invested” (Investopedia, LLC, nd.). The higher the percentage on ROE the better the company is at…

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