Return on Total Asset ratio (Formula, Examples) | Calculation

Описание: In this video, we are going to discuss about Return on total asset ratio in detail. Including its formula, examples and calculation and many more.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬?
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This ratio measures a company's EBIT i.e earnings before interest and taxes relative to its total net assets.

𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐟𝐨𝐫 𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬
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Return on Total Assets Formula = EBIT / Average Total Assets

𝐄𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐑𝐞𝐭𝐮𝐫𝐧 𝐨𝐧 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬
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XYZ International company has a net income of $200,000.

And in this net income figure, includes expense interest i.e of $14,000 and the tax of $30,000.

But when these both expense are added back, the EBIT of the company is $244000.

The total assets figure for the company is $6,000,000. Therefore, the return on total assets is:

(EBIT) $244000 ÷ (Total assets) $6,000,000
= 4% of ROTA (Return on total assets)

To know more about Return on Total Assets Ratio, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞: https://www.wallstreetmojo.com/return...

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