Return on Assets

Return on Assets

Return on Assets ratio indicates how profitable a company’s assets are in generating revenue.

This ratio is calculated to measure the profit after tax against the amount invested in total assets to ascertain whether assets are being utilized properly or not and how to utilize properly.

Return on assets is an indicator of how profitable a company is before leverage, and is compared with companies in the same industry.

How to calculate Return on Assets?

It is calculated as follows:

For example if net profit after tax is Rs.90,000 and total assets are Rs.12,00,000, the net profit ratio will be calculated as follow:

Table of Contents
1) Profitability Indicator Ratios: Introduction
2) Profitability Indicator Ratios: Gross Profit Ratio
3) Profitability Indicator Ratios: Operating Profit Ratio
4) Profitability Indicator Ratios: Net Profit Ratio
5) Profitability Indicator Ratios: Return on Capital Employed
6) Profitability Indicator Ratios: Return on Equity
7) Profitability Indicator Ratios: Return on Assets