Business, Legal & Accounting Glossary
Pretax return on assets ratio is computed by dividing a company’s yearly pre-tax earnings by the company’s total assets. The ratio indicates the profitability of the company compared to its total assets.
A high pretax margin is a positive sign for the company. An increasing margin demonstrates that the concerned company has successfully kept its operational costs low along with substantial earnings. The margin varies considerably between industrial sectors.
It is a measure of a company’s financial performance. It is calculated by the following formula: Return on net assets= Net income / (fixed assets + net working capital)
The higher the RONA, the better the company’s financial performance. Firms with a higher return on net assets show better profits.
It is described as the gain or loss of a security over a specific period. Return comprises capital gains and income relative to investment. It is generally expressed as a percentage. A thumb rule is that with greater risk comes better returns. Loss may also occur in times of speculation gone wrong.
Price-earnings ratio is the valuation ratio of a specific company’s present share price as compared to its earnings-per-share.
The price-earnings ratio is calculated by P/E ratio= Market value per share / Earnings per share (EPS)
For example, if a company’s share is presently trading at $ 10 per share and its earnings over the preceding 12 month period were $ 2 per share, the price-earnings ratio for the company’s stock would be $5 ($10 / $ 2)
It is the return that an asset accomplishes over a time period as compared to a benchmark. The relative return is computed by subtracting the absolute return attained by the asset to the return accomplished by the benchmark. The term is often used to measure the performance of mutual funds. The achievement of a specific mutual fund is compared against a benchmark index to compute the relative return.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Pretax Return On Assets Ratio are sourced/syndicated and enhanced from:
This glossary post was last updated: 27th March, 2020 | 0 Views.