The income number used in the rate of return on assets is income after interest expense is added back.

Question

Quizplus · Accepted Answer

The rate of return on assets (ROA) is calculated by dividing the net income by the total assets. To ensure accuracy, the net income used in this calculation should be after interest expense has been added back. This is because interest expense is a financial cost that reduces the reported net income, but adding it back gives a more accurate picture of the company's profitability.

The Income Number Used in the Rate of Return on Assets