In computing the return on total assets, interest expense is added to net income before dividing by average total assets.

Name: In computing the return on total assets, interest expense is added to net income before dividing by average total assets.
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Interest expense is considered a cost of financing, so it is added back to net income to calculate the return on total assets. Dividing this sum by average total assets gives the return on total assets ratio.

In Computing the Return on Total Assets, Interest Expense Is