FORMULA

Net Profit After Taxes / Total Assets

MEASURE WHAT

Indicates how well assets are used to create wealth, regardless of capital structure. Profitability of operations management

SCORE OR VALUE

Depends on industry

10-15% is reasonable Depends on industry

SALIENT POINTS TO NOTE:

1.Add back interest expenses back into net income when performing this calculation so as to ignore financing and focuses on operations

2  Affected by assets valuation and mix

3.Can be broken into more useful details-asset turnover & profit margin using a Dupont framework