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ROA is an indication of a firms profitability and sustainability. Those organizations that have a negative ROA may not be able to sustain their operations overtime.

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Why do banks have low ROA?

Banks typically have low return on assets (ROA) due to their high asset bases and the nature of their business model. They operate with large amounts of deposits and loans, which can dilute profit margins. Additionally, banks face significant regulatory requirements and operational costs, which further constrain their profitability. Since their earnings are largely derived from interest spread and fees, these factors can lead to lower ROA compared to other industries.


When it comes to equity what does it mean to have negative equity or be underwater?

The amount owed is greater than the car's worth


What does it mean if a company's PEG ratio is negative?

A negative PEG ratio for a company indicates that its stock may be undervalued relative to its earnings growth potential. This could suggest a potential buying opportunity for investors.


The Rangoon Timber Company has the following relationships SalesTotal Assets equals 2.23 ROA equals 9.69 percent ROE equals 16.4 percent What is Rangoon's Profit Margin and Debt Ratio?

What is given is: sales / total assets = 2.23 ROA = 9.69% ROE = 16.4% Find: profit margin Debt ratio ROA = Net income / total assets = (Net income/ net sales) x (net sales /total assets)) Net income / net sales = ROA / (net sales / total assets) = 0.969 / 2.23 = 0.0435 Net profit margin = net income / net sales = 0.0435 = 4.35 % ROE = net income / total equity = (net income/net sales) x (net sales/ total assets) X (total assets / total equity) Total assets / total equity = ROE / ((net income/net sales) x (net sales/ total assets)) = 0.164 / (0.0435 x 2.23) = 0.164 / 0.097 = 1.69 Equity multiplier = total assets / total equity Equity multiplier = ROE / ROA = 0.164 / 0.0969 = 1.69 Equity multiplier = 1 + debt-to-equity ratio Debto-to-equity ratio = equity multiplier - 1 = 1.69 - 1 = 0.69 Total debt ratio = debt-to-equity ratio / (1+debt-to-equity ratio) = 0.69 / (1+ 0.69) = 0.41


What does incurring the wrath of doctors mean?

Incurring the wrath of doctors is an expression used to mean that getting on the wrong side of the doctors will have dire consequences. It simply means having to deal with the negative effects of crossing doctors.