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The Return on Assets Indicator or ROA shows the relationship between a company's profits to its actual assets. It is a measure of the company's profitability.
Return on capital employed means an accounting ratio used in finance, valuation, and accounting. Not to be confused with return on equity, it is similar to return on assets yet takes into account sources of financing.
Return on total asset = Net Income / Total Assets return on total assets = 26000 / 500000 * 100 Return on total assets = 5.2%
How do I calculate the return on operating assets?
Answer:Return on total assets (ROA) equals net income divided by total assets. It is a measure of performance, because the amount that is earned with the assets is divided by the value of the assets (investments). AlternativeInstead of dividing net income by assets, often the interest expense is added back to net income. An alternative measure is thefore:ROA = NOPAT / total assetswhere NOPAT is net operating profit after tax, which is computed as net income plus the interest expense x ( 1 - tax rate).NOPAT shows the profitability of all assets (excluding the cost of financing), but including the 'tax shield' on the interest expense (because interest expense is tax deductable).This is considered to be more precise than dividing net income by assets.Return on equityReturn on equity is a similar ratio, where net income is divided by shareholders' equity. It shows the percentage return that the company has made on its equity.
When the debt ratio is zero
if there is no growth in a firm the return of equity is equal to the dividend yield
Return on equity is the rate of returns you earned on your equity investments Return on net worth is the rate at which your entire property is growing (Your net worth is the sum of all your assets - all your liabilities)
the return on equity divided by the return on assets
The return on shareholders' equity exceeds the return on assets
Company's Total Assets Turnover Ratio is 5 and Equity multiplier is 1.5 times which is cal. as Net Sales/Total Assets and Total Assets/ Shareholder's equity resp. for the two ratios.
Return on assets is Net income/ total assets. Hence to arrive at net income we should ascertain total assets first, as the return on assets is provided at 8.7%. Total assets is sum of Equity plus Debt plus Other liabilities. We have total equity at USD 520000. Hence debt can be ascertained from the Debt Equity ratio at 1.40. But what about other liabilities? As it is not provided we will not be able to compute total assets and hence net income from the given particulars.
The Return on Assets Indicator or ROA shows the relationship between a company's profits to its actual assets. It is a measure of the company's profitability.
One can improve ROE or Return on Equity by simply increasing one's net income for the given amount of equity. Moreover, the other ways to improve ROE are: 1. Improving the profit margin = net income / sales 2. Improve the asset turnover = amount of sales / total assets 3. Improve Equity Multiplier = amount of assets for every dollar of equity x equal total assets / shareholder's equity
EQUITY MULTIPLIER=Total Assets / Total Stockholders' Equity
return on capital employed (ROCE) is net income/(debt&equity) whereas return on equity is income/equity (without debt).
The equity multiplier = debt to equity +1. Therefore, if the debt to equity ratio is 1.40, the equity multiplier is 2.40.