Rate of Return on Total Assets Calculator
**This is a basic calculator and does not accept commas. When entering values, just enter the numbers.
Rate of Return on Total Assets Formula
Rate of Return on Total Assets Ratio =
(Net Income + Interest Expense) / Average Total Assets
**Note: Average total assets is calculated based on beginning period and ending period divided by 2, for example: (January 1 Assets + December 31 Assets) / 2.
(Net Income + Interest Expense) / Average Total Assets
**Note: Average total assets is calculated based on beginning period and ending period divided by 2, for example: (January 1 Assets + December 31 Assets) / 2.
What is Rate of Return on Total Assets?
Rate of return on total assets is a ratio used in accounting to measure how well a company is utilizing its assets to earn income. There are two ways that a business can obtain cash to purchase assets; 1) borrowing from creditors (lenders) or 2) use cash received from stockholders. Lenders expect to receive interest on the money they loan to the business, so the business must pay interest on all money borrowed, whereas shareholders invest in the company hoping to "earn" from the earnings of the company. The net income and interest expense can be found on the Income Statement and average assets can be found on the Balance Sheet.