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
Date Written: 2011
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: Suggested Citation