4.12 : العائد على الأصول

Return on Assets is a financial ratio that measures a company's ability to generate profit from its assets.

A higher ratio indicates more efficient use of assets, while a lower ratio suggests inefficiency.

It is calculated by dividing the company's net income by its total assets.

Let's consider that Peter and Sandra both start hot dog stands. Peter spends one thousand five hundred dollars to start the stand, while Sandra spends fifteen thousand dollars.

Assuming the average assets of each stand equaled the initial investment, Peter earns one hundred fifty dollars, and Sandra earns twelve hundred dollars over a period.

Here, Peter has a ten percent return on assets, while Sandra has an eight percent return on assets. This shows that Peter's stand is more efficient in operating as he can generate ten cents of profit for every dollar of his assets.

It is always best to compare companies' return on assets within the same industry as they will share the same asset base.

Management and investors can use return on assets to determine a business's ability to generate profits using its assets efficiently.