Return on assets - ROA
Return on assets - ROA
Hi friends, first round of posts with 2 value from 3.
So in continuation of the previous post I talked about ROI
(return on investment)
Or Hebrew yield on investment.
In this post we will talk about an additional financial ratio called ROA
(return on assets)
Or in Hebrew a return on assets.
The ROA ratio is calculated by dividing the EBIT by total assets.
(For EBIT see explanation in previous post explaining ROI)
If assets were bought or sold in the course of the year, then we would divide the average assets during the year or those who want to be more precise. We can calculate the weighted average of assets according to the time they worked for us during the year.
The goal of the ROA is to show us what yield the assets will generate during the year regardless of how the assets are financed.
As you notice very similar to ROI, so what's the difference between them ??
ROI
Usually refers to new investments and what is the return that these investments will generate during the period compared to
ROA
Which relates to the total assets held during a period and what the yield generated by the assets during the period.
So to sum up: both ROI and ROA measure return regardless of how the assets are financed (leverage, etc ...).
In the next post we will talk about the ROE (ROE) and the differences between it and ROI and ROA.
From experience with investors from other fields and also most real estate give too much weight to ROI and ROA, although I think return on capital (ROE) should be of more interest to investors and should be given more attention.
Hope you produced value?
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Breathe
I am happy to announce that the post has undergone in-depth inspection and according to the latest appraisal it is definitely suitable for our Nafdia real estate - entered under terms - Return on Assets - return on assets - and of course Lior gained world fame sent to him by Israel Post, so he is expected to receive it within six months. Be strong and courageous !
Thanks .. Interesting
Thanks Lior. As usual written in the most professional way. See the exploding knowledge and there is no doubt that it is a huge contribution to the forum that we have one like you! Of course, the value will be added to Nafdia Real Estate and you will automatically be awarded world fame! ?????