Answer:
The entity is financially stronger performance wise than the industry as a whole although both contribute towards the shareholder's wealth.
Step-by-step explanation:
Average Return on Assets (ROA) = Profit After Tax (PAT) * 100
Average total assets
Average Total Assets = ( Total Assets at beginning of the accounting period + Total Assets at the end of the accounting period) / 2
Return on Equity (ROE) = Dividend * 100
Equity share capital
Industry Entity
ROA 7.9% 9.2%
ROE 15.2% 12.9%
The financial performance of the entity is stronger than the industry, as it's generating greater profits after tax as compared to the whole industry on its average total assets although the dividend payout to the shareholders is less of the entity as compared to the industry as a whole. It's to be noted that dividend is paid out of Profits After Tax. After paying the dividends, we are left with retained earnings, which are used for growth and expansion purposes. The entity is focusing on shareholder's wealth creation via growth and expansion route i.e. using the retained earnings as it's ROE is lower than the industry. The industry is focusing on shareholder's wealth maximization via paying dividends as it doesn't see much of the room for growth and expansion seeing the current industry environment. So, it prefers to pay dividends to its shareholders rather than sitting on idle cash.
Hence, it can be said that the entity is financially stronger performance wise than the industry as a whole although both contribute towards the shareholder's wealth.