# Return on assets: formula and economic sense

One measure of the effectiveness of the economic activity of the enterprise serves the return on assets.The formula of this indicator reflects the level of efficiency of complex financial, human and material resources, including natural resources.Profitability index (ratio) is calculated the ratio of profit to resources flows or assets that form it.Profitability expressed amount of the profit per unit of investment, as well as profit, which in itself carries each earned currency.

There are five main indicators reflecting the return on assets, a formula which has some differences.

Firstly, it is an indicator of general profitability of investments, which gives information about how much of the profit (balance) account for each ruble assets of the enterprise, in other words, shows the effectiveness of the capital.

The second indicator is the return on investment, calculated on the net profit.

third factor appears profitability of fixed assets, a formula that establishes a relationship between the amount of the profits from the use of its own resources and the size of themselves invested their own resources.

also use return on financial long-term assets, which determines the effectiveness of the company's investments in other enterprises.

use of funds invested in the company's own work in the long run, shows the return on equity (permanent).

relative indicator of efficiency advocates the return on assets.Formula coefficient indicates that the value is the quotient of the resulting net profit for the period by the total assets of an enterprise during the same period.This financial ratio refers to a group of profitability and demonstrates the ability of the assets to make a profit.

In general terms, the return on assets - a kind of indicator of the efficiency and profitability of the firm, which does not affect the volume of debt.It is used to compare the performance of companies within the same industry.

Thus, return on assets (formula) equals net income divided by average assets, components are taken for equal an appropriate period of time.

economic return on assets shows the amount of income attributable to each ruble invested in the capital of the company.

profitability of current assets: formula

This indicator is calculated by dividing net income, which remains at the disposal of the company's after-tax, as current assets.The resulting ratio indicates the ability of enterprises to provide a sufficient volume of profits with respect to use of working capital.Increasing the value of the indicator informs about increasing the efficiency of current assets.

overall profitability calculated the ratio of the balance sheet profit to the size of the average annual value of fixed assets and working capital.This figure is a key indicator used in the analysis of the company's profitability.If necessary, a more precise definition of the enterprise calculated key indicators such as the number of revolutions of the assets and the profitability of the turnover.

latter figure reflects the share of the profit that is attributable to each earned ruble.The ratio is calculated by dividing net income by the number of sales, expressed in money.The value obtained indicates the price policy of the company, its ability to control costs.