Return On Assets

The return on assets can be calculated by:

Net income divided by  Total assets

This ratio will tell investors  how effective is a company in investing its money. The greater  the  value  the better. Do note that a company should also compare the return on asset metric with the peers in the same industry.  The company with a greater return on asset as compared to another will grow faster than the other.




Study the return on equity with the return on total assets

If the return on equity and the return on total assets of a company are consistently higher than its peers, that may mean that it enjoys some form of competitive advantage and it is creating value for its shareholders at a faster rate than its peers.

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  • Return On Equity The return on equity can be calculated as : Net income for the latest year divided by  Shareholders’ equity The return on equity is a very important metric for investor....
  • Case Study: Using Call Options To Bolster Return. Learn How One Hedge Fund Manager Earned A 471% Return Using Call Options In 1992, a hedge fund manager name Joel Greenblatt, spotted an opportunity in the form of a company called Wells Fargo. The company experience a beaten down share price as...
  • Net Assets The net assets in a company is equivalent to the total assets less total liabilities. This is normally the term used in a mutual fund, ETF or REITS. The net...
  • Total Assets The total assets in the company is made up of short-term assets and long-term assets. On its own, this figure does not reveal much. It must be compared to the...