Give the formula for computing (a) Rate of return on total assets (ROA) (b) Rate of return
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(a) Rate of return on total assets (ROA)
(b) Rate of return on common stockholders equity (ROE).
Then answer these questions about the rate-of-return computations.
1. Why is interest expense added to net income in the computation of ROA?
2. Why are preferred dividends subtracted from net income to compute ROE?
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Related Book For
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas
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