Return on total assets ratio

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Return on total assets ratio (alternatively known as rate of return on total assets) is a profitability ratio that measures how wisely a company has invested in and managed its assets. This ratio can be arrived at in two ways: (1) net income before interest and taxes divided by total assets and (2) return on sales multiplied by asset turnover.


Definitions

According to College Accounting: A Practical Approach by Slater (13th edition)‎,

Return on total assets ratio. A profitability ratio that measures how wisely a company has invested in and managed its assets. This ratio can be arrived at in two ways: (1) net income before interest and taxes divided by total assets and (2) return on sales multiplied by asset turnover.

According to Managerial Accounting by Braun, Tietz (5th edition),

Rate of return on total assets. Net income plus interest expense divided by average total assets. This ratio measures a company's success in using its assets to earn income for the people who finance the business; also called return on assets.

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