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.
Return on total asset = Net Income / Total Assets return on total assets = 26000 / 500000 * 100 Return on total assets = 5.2%
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.
Current liabilities to total assets ratio is the comparison between total assets in business with current liabilities in business.
Current asset to total asset ratio shows how much is the proportion of current asset with comparison to total assets of business.
Fixed assets to total assets ratio describe about the percentage or number of time fixed assets are of total assets. It helps the management to find out that either they are maintaining proper fixed assets and current assets ratio or there may be any changes required in the ratio which is to be maintained because if they maintain high ratio it will affect the depreciation expense and ultimately net income as well.
Yes it is the formula for calculating return on total assets as follows: Return on total asssets = Net income / total assets * 100
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.
Primary ratio = Net income/Total assets
It is the ratio..
When the debt ratio is zero
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.
Return on total asset = Net Income / Total Assets return on total assets = 26000 / 500000 * 100 Return on total assets = 5.2%
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.
Net Asset Ratio = Total Net Assets/Total 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.
Current liabilities to total assets ratio is the comparison between total assets in business with current liabilities in business.
the return on equity divided by the return on assets