Question

How is return on assets determined? This is for a financial analysis class.Please respond with at...

How is return on assets determined?

This is for a financial analysis class.Please respond with at least 130 words. Thank you!

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Return on assets is measured as change in value of assets. It is reflection of how the prices of an asset have increased or decreased during a specific time period due to generation of revenue or loss.

It is calculated as a ratio of net income generated in given period of time to the total value of assets.

Return on Assets= (Net income generated/ total value of assets)

It shows a percentage of the profitability of the company during a specified time period .A company with high return on assetb is seen as a good potential investment opportunity by investors.

A company with high return on equity is also preferred by financial institutions who believe in lending money to a high ROA firm as they believe that the repayment capabilities of such companies are very high as they are generating a Return on asset which is higher than cost of debt.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
"Risk and Return" Please respond to the following: As a financial manager, determine at what point...
"Risk and Return" Please respond to the following: As a financial manager, determine at what point the risk-free rate of an investment outweighs the risk premium. Provide support for your rationale. Explain whether you believe an investor should invest in risky and riskless assets. Support your answer with an example.
. Explain how the Du Pont system of analysis breaks down return on assets. Also explain...
. Explain how the Du Pont system of analysis breaks down return on assets. Also explain how it breaks down return on stockholders’ equity
The _____________ analysis involves taking all of the absolute figures on the company’s financial statements and...
The _____________ analysis involves taking all of the absolute figures on the company’s financial statements and converting them to percentages. ratio trend common-size All of the above. Which of the following is a category in ratio analysis? market ratios profitability ratios liquidity ratios All of the above. With ___________ analysis, you choose a particular base year and set every single figure in that year’s financial statement equal to 100%. You then look at subsequent years, comparing each individual line in...
Please explain how financial market participants respond to the Fed’s policies
Please explain how financial market participants respond to the Fed’s policies
How is the formula for return on assets calculated? Provide an example. Why is this calculation...
How is the formula for return on assets calculated? Provide an example. Why is this calculation useful, and what does it tell you about the financial health of a company? What are poor results for this calculation, and what would that indicate about the company? How could the underlying issues be addressed?
(Financial statement​ analysis) The annual sales for​ Salco, Inc. were $4.58 million last year. Current assets...
(Financial statement​ analysis) The annual sales for​ Salco, Inc. were $4.58 million last year. Current assets $505,000 Liabilities $1,009000    Net fixed assets 1,513,000 ​Owners' equity $1,009,000 Total Assets $2,018,000 Total $2,018,000 Salco's income statement for the year was as​ follows Sales $4,580,000 ​Less: Cost of goods sold (3,507,000) Gross profit $1,073,000 ​Less: Operating expenses (492,000) Net operating income $581,000 ​Less: Interest expense (109,000) Earnings before taxes $472,000 ​Less: Taxes ​(35%​) (165,200) Net income $306,800 B) Salco plans to renovate...
Name the analysis that would be conducted to respond to the research questions listed below. Second,...
Name the analysis that would be conducted to respond to the research questions listed below. Second, explain how you know that is the correct analysis. ( Quantitative data analysis, or Qualitative data analysis) What are possible differences in mathematics STAAR exam achievement between English speaking students and English Language Learners? [3+2 = 5 Points] Analysis: How you know:
Explain how the derivative market determined the future price of an assets
Explain how the derivative market determined the future price of an assets
I am doing an analysis of an English investment bank during the Global Financial Crisis and...
I am doing an analysis of an English investment bank during the Global Financial Crisis and have analysed their balance sheet values. It was found that they increased their derivative financial assets from 20% to 48% (from 2007 and 2008) and subsequently increase derivative financial liabilities from 20% to 47% (2007 and 2008 values). I am curious in knowing what this means for the bank. Does the reduction in other values such as loans, trading portfolio assets, and other assets...
What is the key difference between financial statement analysis and operating indicator analysis? How are these...
What is the key difference between financial statement analysis and operating indicator analysis? How are these types of analyses useful to healthcare managers and investors? Consider a healthcare organization with which you are familiar and discuss what are some of the problems or challenges inherent in financial statement analysis?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT