Return on Assets Ratio Calculator - Glossary:
Return on Assets:
Shows the proportion of net income to average total assets. In simple words, how efficiently a company can convert the money used to purchase assets into net income or profits.
How to use this equation?The values for net income can be obtained from income statement and total assets value from the balance sheet. To use this ratio, divide net income with average total assets.
Average total assets: Add current year and previous year total assets value, and then divide that value by 2.
Profit left over after deducting all its expenses (cost of goods, operational expenses, interest cost, depreciation cost, taxes and if any dividend paid).
Total assets are the sum of all current and noncurrent assets that a company owns.
Return on assets ratio for a company with net income of $60,000 and total assets of $300,000 is 20%. It means, every dollar that was invested in assets during the year produced $0.20 of net income.