Return On Total Assets - ROTA

外汇网2021-06-19 13:52:45 42

A ratio that measures a company's earnings before interest and taxes (EBIT) against its total net assets. The ratio is considered an indicator of how effectively a company is using its assets to generate earnings before contractual obligations must be paid.

To calculate ROTA:

|||The greater a company's earnings in proportion to its assets (and the greater the coefficient from this calculation), the more effectively that company is said to be using its assets.

To calculate ROTA, you must obtain the net income figure from a company's income statement, and then add back interest and/or taxes that were paid during the year. The resulting number will reveal the company's EBIT. The EBIT number should then be pided by the company's total net assets (total assets less depciation and any allowances for bad debts) to reveal the earnings that company has generated for each dollar of assets on its books.

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