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An Overview of the Return on Assets Ratio Formula Return on assets is a measure of corporate efficiency. The more a company can earn relative to its total assets, the more productive it is.
The phrase return on average assets (ROAA) is also used, to emphasize that average assets are used in the above formula. [2] This number tells you what the company can do with what it has, i.e. how many dollars of earnings they derive from each dollar of assets they control. It's a useful number for comparing competing companies in the same ...
As a result, Synchrony generated full year 2024 net earnings of $3.5 billion or $8.55 per diluted share, a return on average assets of 2.9% and a return on tangible common equity of 27.5%.
The company's operating income margin or return on sales (ROS) is (EBIT ÷ Revenue). This is the operating income per dollar of sales. [EBIT/Revenue] The company's asset turnover (ATO) is (Revenue ÷ Average Total Assets). The company's equity multiplier is (Average Total Assets ÷ Average Total Equity). This is a measure of financial leverage.
Arithmetic return: average return of different observation periods; Geometric return: return depending only on start date and end date of one overall observation period; Rate of return or return on investment; Total shareholder return: annualized growth in capital assuming that dividends are reinvested
Return on equity (ROE) and return on assets (ROA) determine how efficient a company can be at generating profits. Both formulas that can help investors determine how good a company is at turning a ...
Profitability ratios measure the firm's use of its assets and control of its expenses to generate an acceptable rate of return. [ 2 ] Liquidity ratios measure the availability of cash to pay debt.
When it comes to investing in banks, return on assets (ROA) and return on equity (ROE) are two of the most critical metrics to consider. While these metrics are great places to start, investors ...