Formula So what is the return on asset formula? You can easily calculate a company’s ROA by using the following equation: Return on Total Asset Ratio = Net Income / Total Assets A company’s net, after-tax income can usually be found on its income statement for a given period, while ...
The return on assets ratio, often called the return on total assets, is a profitability ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets.
Return on Assets Ratio: Formula and Calculation The return on assets ratio iscalculatedby dividing a company’s net income by its total assets. It’s expressed as a formula like this: ReturnonAssets=NetIncomeTotalAssetsReturn\ on\ Assets = \frac{Net\ Income}{Total\ Assets}ReturnonAssets=Tota...
Return on total assets (ROTA) is one of the profitability indicators that measures how efficiently the firm manages its assets to earn profits. Its formula is a simple ratio of the Operating Profit to the Average Assets of the return on total assets ratiodetermines companies that are using thei...
ROA Formula. Return on Assets (ROA) is a type of return on investment (ROI) metric that measures the profitability of a business in relation to its total assets.
Since the ROTA formula uses the book values of assets from the balance sheet, it may be significantly understating the fixed assets' actual market value. This leads to a higher ratio result that shows a return on total assets that is higher than it should be because the denominator (total ...
RETURN ON ASSETS DefinitionRETURN ON ASSETS (ROA) shows the after tax earnings of assets. Return on assets is an indicator of how profitable a company is. Use this ratio annually to compare a business performance to the industry norms: The higher the ratio the greater the return on assets....
Return on Equity (ROE) Formula ROE = Operating Performance × Asset Turnover × Debt-Equity Management Ratio Net Profit Total Revenue Total Revenue Average Total Assets Average Total Assets Average Stockholders' Equity = × × = Net Profit Average Stockholders' Equity...
Formula In order to calculate the return on average assets ratio for a company you would like to evaluate, you can use the following formula: Return on Average Assets= Net Income / Average Total Assets Net income can be found at the bottom line of a company’s income statement. ...
The formula used to calculate the return on assets (ROA) can be found below. Return on Assets (ROA) = Net Income ÷ Average Total Assets The numerator is also net income, but the distinction is the denominator, which consists of the average value of a company’s entire asset base. The...