What is the return on assets ratio?

Definition of Return on Assets Ratio

The return on assets ratio, or return on total assets ratio, relates a company's net income during a specific year, to the company's average total assets during the same year.

The return on assets ratio for a regular corporation can be computed using the before tax earnings and/or the after tax earnings.

Example of Return on Assets Ratio

Assume that during its most recent year, a company's income statement reported net income of $60,000. During the same period, the company's 12 monthly balance sheets reported an average of $1,000,000 in total assets. The company's return on assets ratio for the year was 6% ($60,000 divided by $1,000,000).

This company's return on assets can be compared to other companies in the same industry.

Free Financial Statements Cheat Sheet

527,369
Subscribers
You are already subscribed. This offer is not available to existing subscribers.
Error: You have unsubscribed from this list.
Step 2: Please check your email.