Return on assets (ROA) is the number of cents earned on each price of assets. The ROA ratio formula is calculated by dividing net income by average total assets. Below given is the return on assets example problems where you come to know how to calculate ROA ratio
Let us consider the problem: A company has $20,000 in total assets and generates $5,000 in net income. Calculate return on assets ratio?
We can calculate the Return on Assets using the given formula.
Substituting the values in the formula,
Return on Assets Ratio = (5000 / 20000) × 100 = 0.25 x 100 = $ 25
Therefore, ROA Ratio is $ 25.
Refer the below return on assets ratio example problem with solution.
Let us consider the problem: A person has a total assets of Rs. 1,345,000 and it earned to net income of Rs. 213,000 at the end of the year. Calculate its return on assets ratio.
Substituting the values in the above given formula,
ROA Ratio = (213000 / 1345000) × 100 = 0.1583 x 100 = Rs. 15.83
Therefore, the value of Return on Assets is Rs. 15.836.