Profitability Analysis Ratios
Return on Assets (ROA)
Net Income
Return on Assets (ROA) =
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Average Total Assets
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
Return on Equity (ROE)
Net Income
Return on Equity (ROE) =
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Average Stockholders’ Equity
Average Stockholders’ Equity
= (Beginning Stockholders’ Equity + Ending Stockholders’ Equity) / 2
Return on Common Equity (ROCE)
Net Income
Return on Common Equity =
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Average Common Stockholders’ Equity
Average Common Stockholders’ Equity
= (Beginning Common Stockholders’ Equity + Ending Common Stockholders’ Equity) / 2
Profit Margin
Net Income
Profit Margin =
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Sales
Earnings Per Share (EPS)
Net Income
Earnings Per Share =
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Number of Common Shares Outstanding