What is Your ROA? an Investigation of the Many Formulas for Calculating Return on Assets (Report‪)‬

INTRODUCTION A recent study by Mankin and Jewell (2010) of ratios in 77 current business textbooks made several interesting discoveries. The study included accounting, finance, management, marketing, and financial statement analysis textbooks. Two of the most interesting points are as follows. First, textbook authors are in unanimous agreement on how to calculate very few ratios. The current ratio, gross profit margin, and dividend yield are the most notable of these ratios. Second, most ratios, even the most commonly used ones, have several alternate formula versions. Common ratios with substantial disagreement in the formulas are return on assets, quick ratio and inventory turnover.