Return on Assets ROA Return on Capital ROC

The return on assets (ROA) of a firm measures its operating efficiency in generating profits from its assets, prior to the effects of financing.

Total Assets

Earnings before interest and taxes (EBIT) is the accounting measure of operating income from the income statement and total assets refers to the assets as measured using accounting rules, i.e., using book value for most assets. Alternatively, return on assets can be written as:

rOa Net Income + Interest Expenses (1 - tax rate)

Total Assets

By separating the financing effects from the operating effects, the return on assets provides a cleaner measure of the true return on these assets.

ROA can also be computed on a pre-tax basis with no loss of generality, by using the earnings before interest and taxes (EBIT), and not adjusting for taxes -

Retirement Planning For The Golden Years

Retirement Planning For The Golden Years

If mutual funds seem boring to you, there are other higher risk investment opportunities in the form of stocks. I seriously recommend studying the market carefully and completely before making the leap into stock trading but this can be quite the short-term quick profit rush that you are looking for if you am willing to risk your retirement investment for the sake of increasing your net worth. If you do choose to invest in the stock market please take the time to learn the proper procedures, the risks, and the process before diving in. If you have a financial planner and you definitely should then he or she may prove to be an exceptional resource when it comes to the practice of 'playing' the stock market.

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