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Instead of dividing net income by assets, often the interest expense is added back to net income. An alternative measure is thefore:
ROA = NOPAT / total assets
where 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.
What else can I help you with?
How do you Compute return on assets if total assets where 500000 dollars and net income was 26000 dollars?
Return on total asset = Net Income / Total Assets return on total assets = 26000 / 500000 * 100 Return on total assets = 5.2%
What is the Earning assets to total assets ratio?
Its the ratio between the assets which generate income for the business to total assets owned by the business.If the ratio is higher, that shows business is in good position.
What is current liabilities to total assets ratio?
Current liabilities to total assets ratio is the comparison between total assets in business with current liabilities in business.
HOW TO FIND DEBT TO ASSETS RATIO?
To find the debt to assets ratio, divide total liabilities by total assets. The formula is: Debt to Assets Ratio = Total Liabilities / Total Assets. This ratio indicates the proportion of a company's assets that are financed by debt, helping assess its financial leverage and risk. A lower ratio suggests a more financially stable company, while a higher ratio may indicate increased risk.
What is current assets to total assets ratio?
Current asset to total asset ratio shows how much is the proportion of current asset with comparison to total assets of business.
Is the return on assets ratio computed by dividing net income by total assets?
Yes it is the formula for calculating return on total assets as follows: Return on total asssets = Net income / total assets * 100
What is net profits divided by total assets?
net profit devided by total assets is called return on total asset and formula is as follows: Return on total assets = Net profit / total assets.
Return on assets ratio pyramid showing primary secondary and tertiary ratios?
Primary ratio = Net income/Total assets
What is relationship of asset turnover rate to the rate of return on total assets?
It is the ratio..
Return on equity equals return on assets?
When the debt ratio is zero
What is the net income if a company has a debt equity ratio of 1.40 return on assets is 8.7 percent and total equity is USD520000?
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.
How do you Compute return on assets if total assets where 500000 dollars and net income was 26000 dollars?
Return on total asset = Net Income / Total Assets return on total assets = 26000 / 500000 * 100 Return on total assets = 5.2%
What is the Earning assets to total assets ratio?
Its the ratio between the assets which generate income for the business to total assets owned by the business.If the ratio is higher, that shows business is in good position.
How do you calculate the net asset ratio?
Net Asset Ratio = Total Net Assets/Total Assets
If a company has an Return on Assets of 10 percent a 2 percent profit margin and a return on equity equal to 15 percent what is the company's total assets turnover and the equity multiplier?
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.
What is current liabilities to total assets ratio?
Current liabilities to total assets ratio is the comparison between total assets in business with current liabilities in business.
What is a leverage multiplier ratio?
the return on equity divided by the return on assets
