Asked by Sandhu Luvjit on Jul 02, 2024
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Before computing ROA,analysts isolate a company's sustainable operating profits by removing nonoperating or nonrecurring items from reported income.
Sustainable Operating Profits
Profits from core business operations that are expected to continue or be maintained without significant new investment or changes in the business environment.
Nonrecurring Items
Financial events that are not expected to happen regularly in a company's business cycle, affecting the company's usual revenue or expenses.
Reported Income
The income that a company officially reports, usually on its income statement, reflecting the financial performance over a specific period.
- Learn how to compute and interpret Return on Assets (ROA) considering nonoperating or nonrecurring items.
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Learning Objectives
- Learn how to compute and interpret Return on Assets (ROA) considering nonoperating or nonrecurring items.
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