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Net Earnings
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| Return on Total Assets =
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Total Assets
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Explanation of Return on Total Assets:
Also called Return on Total Investment, or ROI, the Return on Total
Assets measures the Net Earnings in relation to the Total Assets.
The Return on Total Assets identifies how well the investments of the company
(the Total Assets) have generated earnings (Net Earnings) back to the
company.
Importance of Return on Total Assets:
Smart companies strictly control major purchases, attempting to
limit those that will best bring a return in greater revenue to the
company. The Return on Total Assets is a useful way to measure how well
the company is actually able to make intelligent choices on how to spend its
money on new assets.
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