What is Your ROA? An Investigation of the Many Formulas for Calculating Return on Assets

Academy of Educational Leadership Journal, 15 (Special Issue), 79-91

13 Pages Posted: 2 Oct 2012 Last revised: 20 Jul 2018

See all articles by Jeffrey Jay Jewell

Jeffrey Jay Jewell

Lipscomb University - Department of Accounting, Finance & Economics

Jeffrey A. Mankin

Lipscomb University - Department of Accounting, Finance & Economics

Date Written: 2011

Abstract

This paper compares the eleven different versions of computing return on assets that can be found in current business textbooks. To illustrate the practical differences between the different versions, each version of ROA is calculated for eight slightly different example firms. The results are then compared and analyzed. Pros and cons are then discussed for each version of ROA. A practical ROA taxonomy is proposed to organize the several different versions and to improve comparability.

Keywords: financial ratios, financial analysis, return on assets

JEL Classification: M41, G12, G32

Suggested Citation

Jewell, Jeffrey Jay and Mankin, Jeffrey A., What is Your ROA? An Investigation of the Many Formulas for Calculating Return on Assets (2011). Academy of Educational Leadership Journal, 15 (Special Issue), 79-91. Available at SSRN: https://ssrn.com/abstract=2155943

Jeffrey Jay Jewell

Lipscomb University - Department of Accounting, Finance & Economics ( email )

One University Park Drive
Nashville, TN 37204-3951
United States
6159665769 (Phone)

Jeffrey A. Mankin (Contact Author)

Lipscomb University - Department of Accounting, Finance & Economics ( email )

One University Park Drive
Nashville, TN 37204-3951
United States

HOME PAGE: http://www.lipscomb.edu

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