Return on Assets (ROA) - Meaning, Formula, Calculation & Interpretations

[@wallstreetmojo]

Download the Colgate Return on Assets excel template used in this video from this link - www.wallstreetmojo.com/ratio-analysis-template/

[@tanyawhite8678]

Very helpful step by step tutorial on ROA.

[@omaralamro5092]

thanks, sir, it was very helpful, may I ask you to make a video on the same topic but using another formula to measure the ROA, for example (net income/ total assets).

[@kendrickraynes7031]

good explanation

[@priteshpatel4102]

The formula for RoA= Net Income/Average total assets. Can u pls. guide.

[@wallstreetmojo]

Hi Pritesh, it is not absolutely correct to use Net Income in the numerator. Instead you should use "EBIT or Earnings before interest and taxes" in the numerator. The reason is to make the numerator comparable to the denominator i.e. Assets = Liabilities + Equity.
Net Income is the item that accrues only to the Equity holders, therefore, we should take a number that is before the Equity and debt, ie. EBIT.

[@kimkimdinar9113]

@@wallstreetmojoomg sir, I just come across this question from my assignment and intend to ask my lecturer in the next class but I just stumble upon your video and figure that out, You literally Bless Me

[@kimkimdinar9113]

@@wallstreetmojoI subscribed your channel to express my gratitude

[@diyasaxena9956]

Return on assets numerator deduct tax