Return on Assets

CFA Level I
#1

So I’m officially confused here. I thought Return on Assets = Net Profit Margin x Asset Turnover = Net Income/Net Sales Rev x Net Sales Rev/Av.Total Assets I see on Shweiser study sheet that ROA (Total Capital) = EBIT/Total Capital. Isnt Return on Total Capital different to ROA? Has anyone else encountered this? THANKS!!

#2

There is ROTC and ROA - they are different.

#3

Return on Total Capital = EBIT/Total Capital Should be probably labeled like that.

#4

right … and ROA is what I wrote in the 1st post?

#5

Yes, ROA = (Net Profit Margin) X (Asset Turnover) then…ROE = ROA X Leverage! I think you might be confusing return on total assets (ROTA) = (EBIT/Total NET Assets)