ROA - Two formulas - differences


I noticed in the formular that there are two formulas for ROA

  • Net income/average total assets

-Net income+int. expeses (1-t)/total assets

What is exactly the difference? Do you guys have a specific example of when I have to do use one of these formulas instead of the other one?


where did you see the second forumla?

CFA Institute would have to let you know that they want you to use the second formula; the first is far more common.


Thank you for your answer! I found this second formula on the Schweser’s formula sheet.

yea, it looks more like return on asset to me, infact, i think the second formula seems more logical than the first.