SWM - Mark Moore

Return on Assets 2004 2005 2006 2007 2008Schweitzer 5.72% 2.71% -0.12% 0.49% 0.09%SWM (Restated) 6.20% 3.36% 0.51% 1.25% 0.82%Universal 4.44% 3.84% 0.28% 1.53% 5.12%Alliance -2.43% 0.98% -31.87% -1.13% 1.02%Industry Average 2.58% 2.51% -10.57% 0.29% 2.08%As shown in the graphs, Schweitzer is able to maintain higher than industry averageevery year except for 2008 for the as stated and restated. However, this average is skewed bythe unusually low ROA from Alliance. The industry’s average trend followed the trends frommost of the other ratios, with a low spike in 2006 with slow increases afterwards. Schweitzerneeds to increase their return on assets in the future by allocating their resources to methodsthat have proven to be more productive and efficient.Return on EquityThe Return on Equity ratio (ROE) is used to determine how well a firm is usingshareholder capital to generate return for the firm. This may be one of the most important andrelevant ratios to investors. This is calculated by taking the current year’s net income anddividing it by the previous year’s total equity. This ratio is also “lagged” because it uses theprevious year’s equity as a basis for the current year. Interestingly enough, the return on equityhas a direct relationship with a firm’s capital structure. Return on equity is negatively orpositively affected by shifts in the debt to equity ratio (this is with the assumption that netincome is held constant).125