How is Return on Assets (ROA) calculated? How is ROA disaggregated?
How is Return on Assets (ROA) calculated? How is ROA disaggregated?
Homework Answers
Formula : Return on Assets (ROA)
We can determine by dividing Net income (Return) of the entity by the Average total assets of such entity.
= Net income / Average total assets
Entity ability to earn net income (return) in relation to the entity assets used (Resource). In other words we can say how the resources of the company are used in optimum. Result of the ROA is represented in percentage.
ROA = Profit margin × Assets turnover
ROA = (Net Income / Turnover) × (Turnover / Average total assets)
Clearly define Return on Equity' (ROE); how does it differ from 'Return on Assets (ROA)'? In...
Clearly define Return on Equity' (ROE); how does it differ from 'Return on Assets (ROA)'? In addition, why are market participants interested in calculating a company's P/E ratio before making investment decisions ?
Return on equity can be calculated as ROA × Equity multiplier. What is another way to...
Return on equity can be calculated as ROA × Equity multiplier. What is another way to express this equation? a)ROE = ROA × (1 + Debt − Equity Ratio) b)ROE = ROA × Profit Margin c)ROE = ROA × Total asset Turnover d)ROE = ROA × (1 − Equity multiplier) e) ROE = ROA × Operating efficiency
Explain the use of return on assets (ROA) and the price-to-earnings (PE) ratio in evaluating the...
Explain the use of return on assets (ROA) and the price-to-earnings (PE) ratio in evaluating the performance of a company. Write about how to calculate ROA and PE ratio and how market conditions can affect these metrics. Share the ROA and PE ratio for a company you are familiar with. What do these metrics tell you about the financial health of the company?
Dupont Analysis: Company A and Company B each had a return on assets (ROA) of 9.0%...
Dupont Analysis: Company A and Company B each had a return on assets (ROA) of 9.0% in 2018. However Company A has an equity multiplier ratio (as measured by assets/stockholders' equity) that is half of the equity multiplier calculated for Company B. Which of the following statements is Correct? A. Company A has a higher return on equity (ROE) than Company B. B. Company B has a higher ROE than Company A. C. Company B has more shares outstanding than...
Compute the return on assets (ROA) for La Verne Company using end-of-year assets in your calculation....
Compute the return on assets (ROA) for La Verne Company using end-of-year assets in your calculation. Total revenue $250,000 Total expenses $190,000 Total assets $400,000
Assume the following relationships for the Caulder Corp.: 1.5x Sales/Total assets Return on assets (ROA) Return...
Assume the following relationships for the Caulder Corp.: 1.5x Sales/Total assets Return on assets (ROA) Return on equity (ROE) 6% 12% a. Calculate Caulder's profit margin assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. % b. Calculate Caulder's debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. %
a. Compute the return on assets (ROA) for 2018 and 2017. Round answers to one decimal...
a. Compute the return on assets (ROA) for 2018 and 2017. Round
answers to one decimal place (ex: 0.2345 = 23.5%).
b. Compute the profit margin (PM) for 2018 and 2017.
Round answers to one decimal place (ex: 0.2345 = 23.5%).
c. Compute the asset turnover (AT) for 2018 and 2017.
Round answers to two decimal places.
d. Which component of ROA (profit margin or asset turnover or
both) drives the change in ROA in 2018?
e. Compute the return...
1.What is the return on assets (ROA) for a firm that has a debt ratio of...
1.What is the return on assets (ROA) for a firm that has a debt ratio of 0.65, a net profit margin of 6.5%, sales of $740,000, and a total asset turnover of 4? 2. Thompson Corp has a NPM of 11.5%. They reported earnings after tax of $632,500. If they had net fixed assets of $1,500,000 and current assets of $750,000, what are their total asset turnover ratios?
Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.2× Return on assets (ROA) 5.0%...
Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.2× Return on assets (ROA) 5.0% Return on equity (ROE) 9.0% Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Debt-to-capital ratio: %
Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.3x Return on assets (ROA) 4.0%...
Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.3x Return on assets (ROA) 4.0% Return on equity (ROE) 13.0% Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Debt-to-capital ratio: %
Clearly define Return on Equity' (ROE); how does it differ from 'Return on Assets (ROA)'? In addition, why are market participants interested in calculating a company's P/E ratio before making investment decisions ?
Assume the following relationships for the Caulder Corp.: 1.5x Sales/Total assets Return on assets (ROA) Return on equity (ROE) 6% 12% a. Calculate Caulder's profit margin assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. % b. Calculate Caulder's debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. %
a. Compute the return on assets (ROA) for 2018 and 2017. Round
answers to one decimal place (ex: 0.2345 = 23.5%).
b. Compute the profit margin (PM) for 2018 and 2017.
Round answers to one decimal place (ex: 0.2345 = 23.5%).
c. Compute the asset turnover (AT) for 2018 and 2017.
Round answers to two decimal places.
d. Which component of ROA (profit margin or asset turnover or
both) drives the change in ROA in 2018?
e. Compute the return...
Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.3x Return on assets (ROA) 4.0% Return on equity (ROE) 13.0% Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Debt-to-capital ratio: %
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