Return on Total Asset ratio (Formula, Examples) | Calculation

In this video, we are going to discuss about Return on total asset ratio in detail. Including its formula, examples and calculation and many more.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬?
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This ratio measures a company's EBIT i.e earnings before interest and taxes relative to its total net assets.

𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐟𝐨𝐫 𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬
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Return on Total Assets Formula = EBIT / Average Total Assets

𝐄𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬
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XYZ International company has a net income of $200,000.

And in this net income figure, includes expense interest i.e of $14,000 and the tax of $30,000.

But when these both expense are added back, the EBIT of the company is $244000.

The total assets figure for the company is $6,000,000. Therefore, the return on total assets is:

(EBIT) $244000 ÷ (Total assets) $6,000,000
= 4% of ROTA (Return on total assets)

To know more about Return on Total Assets Ratio, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞: https://www.wallstreetmojo.com/return-on-total-assets-roa/

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Тэги:

#return_on_total_assets_formula #return_on_total_assets #return_on_total_assets_ratio #return_on_total_assets_example

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