what is return on total assets 
return on total assets rota is a ratio that measures a company s earnings before interest and taxes ebit relative to its total net assets it is defined as the ratio between net income and total average assets or the amount of financial and operational income a company receives in a financial year as compared to the average of that company s total assets the ratio is considered to be an indicator of how effectively a company is using its assets to generate earnings ebit is used instead of net profit to keep the metric focused on operating earnings without the influence of tax or financing differences when compared to similar companies understanding return on total assetsthe greater a company s earnings in proportion to its assets and the greater the coefficient from this calculation the more effectively that company is said to be using its assets the rota expressed as a percentage or decimal provides insight into how much money is generated from each dollar invested into the organization this allows the organization to see the relationship between its resources and its income and it can provide a point of comparison to determine if an organization is using its assets more or less effectively than it had previously in circumstances where the company earns a new dollar for each dollar invested in it the rota is said to be one or 100 percent the formula for return on total assets rota is return on total assets ebit average total assets where ebit earnings before interest and taxes begin aligned text return on total assets frac text ebit text average total assets textbf where text ebit text earnings before interest and taxes end aligned return on total assets average total assetsebit where ebit earnings before interest and taxes to calculate rota divide net income by the average total assets in a given year or for the trailing twelve month period if the data is available the same ratio can also be represented as the product of profit margin and total asset turnover 