The return on total assets (ROA) measures the return on all the firm's assets-Select- interest and taxes. Its equation is Net income Total assets Return on total assets (ROA) A low ROA can result from a firm's decision to use more debt because high interest expenses will cause net income to decline. The basic earning power (BEP) ratio shows the earning power of the firm's assetsbeforetaxes and debt and is useful for comparing firms with different debt ratios and tax rates. Its equation is: EBIT Basic eaming power (BEP) Total asseta The return on invested capital (ROIC) shows the after-tax operating return on total invested capital, which is equal to the sum of debt and equity (assuming no preferred stock is issued). Its equation is: EBIT (1-T) invested capital (ROIO)Total invested capital The return on common equity (ROE) measures the return on -Select- investment. Its equation is: - Net income Common equity Return on common equity (ROE)