Return on total assets is a profitability measure that assesses how well a company is managing its assets to generate returns. The higher the return on assets is the better the company is managing its assets.
The formula for return on total assets
ROA = Net Profit / Total Assets
The ROA should be compared with the industry average and also with previous years to observe the real cause of improvement or decrease in return on assets rate. A higher return on assets can be achieved on basis of higher net profit or lower total assets. If there is a decrease in total assets for example the profit might be higher as compared to last year due to profit earned on the sale of a fixed asset. This way the return on assets will be higher however the reason behind this improvement is not justifiable.
Refer to the RadioShack Corporation Consolidated Financial Statements in Appendix B at
a. How does the return on total assets differ from the
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The following information is available from the financial statements of Regae Industries
