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Advanced Rate of Return

First some advanced Rate of Return equations:
Return on Fixed Assets (ROFA)= PBIT * 100
Fixed Assets

Return on Working Capital (ROWC)= PBIT * 100
Working Capital

In addition to the ROCE and ROTA ratios, there are other ratios that will help us to appreciate the efficiency with which the management is using its resources. Here are two ratios that help us with this further analysis.

Remember that with the ROTA we used PBIT for our numerator (that's the number on the top of the formula). We use the same measure of profit for the Return on Fixed Assets (ROFA) and the Return on Working Capital (ROWC). Let's have a look.


Source:
http://www.bized.co.uk/
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