Asked by Courtlyn Patrick on May 01, 2024
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When computing the return on total assets, the after-tax effect of interest expense must be subtracted from net income.
Return On Total Assets
A financial ratio indicating the profitability of a company relative to its total assets, showing how effectively a company is using its assets to generate profits.
After-Tax Effect
The impact of transactions on a company's net income after accounting for taxes, reflecting the true financial outcome.
Interest Expense
Interest expense is the cost incurred by an entity for borrowed funds, reflected in the income statement as a financial charge.
- Comprehend the methodology behind computing return on total assets.
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Learning Objectives
- Comprehend the methodology behind computing return on total assets.
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