Financial Ratio Analysis - Rate of Return

Rate of Return

First some basic Rate of Return equations:

Return on Capital Employed (ROCE) =     Profit for the Year     * 100
Equity Shareholders' Funds

Return on Total Assets (ROTA) =     PBIT     * 100
Total Assets

The rate of return ratios are thought to be the most important ratios by some accountants and analysts. One reason why the rate of return ratios are so important is that they are the ratios that we use to tell if the managing director is doing their job properly.

Section Index | Previous | Next | Next Section | Section Map