Return on total assets

Return on total assets Net profit after taxes/total assets 7-10%... 

A wider method of evaluating a firm s efficiency is the rate of return on total assets. Because the accounting equation requires that total assets equal the sum of fofal liabilities and total stockholder s equity, this ratio provides a measure of fhe firm s efficiency at managing both stockholder and creditor investments ... 

The return on total assets ratio is the net profit after taxes divided by the total assets expressed as a percentage. It reflects the overall return that a company has earned on its assets. The average for all industries is 10%, but figures vary widely. 

The profitability is about average, although the return on total assets is low. 

The return-on-equity ratio is the net income after taxes and interest divided by the stockholders equity. It sometimes is called the return on net worth, and this ratio is probably the best measure of management s performance. Returns on equity vary depending on company performance, but a figure of 15% is not um-easonable. The return-on-total assets ratio is the net profit after taxes divided by the total assets expressed as a percentage. It reflects the overall return that a company has earned on its assets a reasonable value is about 10%. 

Figure 1. Graphs of after-tax earnings. After-tax earnings as percentage of stockholders equity or total assets (A). Total chemical industry return on total assets (-),...

One measure of how a company uses its assets is the return on total assets, which is defined as the ratio of income before interest and taxes to total assets. Using data in Tables 16.3 and 16.4, this ratio for U.S. Chemicals is 1,390/14,211 = 0.098 or 9.8%, which is higher than the 4.84% achieved by Monsanto Company in the year 2000. 

Return on total assets (ROA) = Net income available to common... 

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