Rate of return on total assets uses net income and interest expense from the income statement, and average total assets from the balance sheet.

Question

Quizplus · Accepted Answer

The rate of return on total assets (ROTA) formula calculates how efficiently a company is using its assets to generate earnings. It incorporates net income and interest expense to adjust for the use of leverage, and it uses average total assets to account for variations in asset size over the period.

Rate of Return on Total Assets Uses Net Income and Interest