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Return on assets. The return on assets ( ROA) shows the percentage of how profitable a company's assets are in generating revenue . ROA can be computed as below: The phrase return on average assets (ROAA) is also used, to emphasize that average assets are used in the above formula. [2]
The company's operating income margin or return on sales (ROS) is (EBIT ÷ Revenue). This is the operating income per dollar of sales. [EBIT/Revenue] The company's asset turnover (ATO) is (Revenue ÷ Average Total Assets). The company's equity multiplier is (Average Total Assets ÷ Average Total Equity). This is a measure of financial leverage.
Return on investment. Return on investment ( ROI) or return on costs ( ROC) is the ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time). A high ROI means the investment's gains compare favourably to its cost. As a performance measure, ROI is used to evaluate the ...
Return on equity (ROE) and return on assets (ROA) determine how efficient a company can be at generating profits. Both formulas that can help investors determine how good a company is at turning a ...
The strength of a company isn’t just about how much money it makes. Investors also want to know how efficiently a company uses its assets, over a set period of time, based on its size and ...
Return on capital. Return on capital ( ROC ), or return on invested capital ( ROIC ), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders. [1] It indicates how effective a company is at ...
The return on equity (ROE) is a measure of the profitability of a business in relation to its equity; where: . ROE = Net Income / Average Shareholders' Equity Thus, ROE is equal to a fiscal year's net income (after preferred stock dividends, before common stock dividends), divided by total equity (excluding preferred shares), expressed as a percentage.
It is commonly represented as total assets less current liabilities (or fixed assets plus working capital requirement). [2] ROCE uses the reported (period end) capital numbers; if one instead uses the average of the opening and closing capital for the period, one obtains return on average capital employed (ROACE).