Return on total assets (ROA), also known as return on assets. Refers to the ratio of the total salary to the average total assets of an enterprise in a certain period of time. It represents the overall profitability of all assets of an enterprise, including net assets and liabilities, and is used to evaluate the overall profitability of an enterprise in using all assets, which is an important index to evaluate the efficiency of enterprise asset operation.
Return on total assets = (total profit+interest expense)/average total assets X 100%.
The average total assets refer to the average of the total assets of an enterprise at the beginning and the end of the year, and the data are taken from the balance sheet of the enterprise.
Average total assets = (total assets at the beginning of the year+total assets at the end of the year) /2
Return on investment (ROI) refers to the value that should be obtained through investment, and the economic return that an enterprise obtains from its investment in an investment operation. It covers the profit target of the enterprise. Profits are related to the property necessary for the invested operation, because managers must obtain profits through investment and existing property.
Return on investment is also called "return on investment". It is a comprehensive quality index to comprehensively evaluate the business activities and performance of investment centers. It can not only reveal the sales profit level of the investment center, but also reflect the use effect of assets.
To calculate the rate of return on investment, we must first distinguish between enterprises as the main body of investment and shareholders as the main body of investment:
If the enterprise is the main investor, the return on investment = (operating profit ÷ operating assets (or investment)) * 100%, in which: operating profit refers to "earnings before interest and tax", and operating assets include all assets operated by the enterprise, calculated by the average balance at the beginning and end of the period. The calculation formula of return on investment can be further expressed as: return on investment = (operating profit ÷ sales income) * (sales income ÷ operating assets) = sales profit rate * asset turnover rate.
If the shareholder is a major investor, the return on investment = (net profit/average net assets) * 100%, where the average net assets are the capital invested by the shareholder and the net profit is the shareholder's return. Therefore, the return on investment at this time is usually called return on equity or return on equity.