what is ROA, what is ROE and what each of these ratios signify?

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Expert Solution

ROA is return on assets
ROA = Net income/Total assets
ROA signifies how profitable a company is relative to its assets.
ROA also tells us how efficient a company is at using its assets
to generate earnings.

ROE is return on equity
ROE = Net income/Shareholders's equity.
Shareholders equity = Total assets - total liabilities.
ROE is the return on net assets.
ROE also tells us how efficient a company is at using its net assets
to generate earnings.

jeff jeffy answered 1 year ago

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