The calculation method of return on total assets is: return on total assets = (net profit/average total assets) × 100%.
As follows:
The return on total assets is the ratio of the company's net profit to the average total assets. The calculation formula is: return on total assets = (net profit/average total assets) ×100%. Return on total assets is a ratio used when analyzing a company's profitability. Generally speaking, the higher the return on total assets, the better the profitability of the company.
Return on total assets is another very useful ratio when analyzing a company's profitability. Is another indicator of a company's profitability. When assessing the achievement of corporate profit targets, investors often focus on the effect of remuneration related to invested assets, and often make judgments based on indicators such as earnings per share (EPS) and return on equity (ROE).
In fact, return on total assets (ROA) is a more effective indicator. The level of return on total assets directly reflects the company's competitive strength and development capabilities, and is also an important basis for deciding whether the company should use debt to operate.
The higher the return on total assets, the better. There is no reasonable range. Each industry is different, and the risk preference is also different. For example, the return on assets of a general manufacturing company is between 5-10%, and it is above 10%. %-20% is considered good, but the return on total assets should not be lower than the interest rate on one-year bank deposits. Otherwise, it means that it is impossible to provide investors with more favorable returns and to cover higher capital costs.
Return on Total Assets (ROTA) is another very useful ratio when analyzing a company's profitability. Is another indicator of a company's profitability.
Analyzing the return on total assets and the return on net assets (net profit/shareholders’ equity × 100%) can illustrate the risk level of the company’s operations based on the gap between the two; for companies with few net assets left For companies, although their indicator values ??are relatively high, it still does not mean that their risk level is small; and the return on net assets, as one of the necessary conditions for allotment, is an important reference indicator for companies to adjust profits.