Profitability analysis
Free IMA CMA Part 2 (Strategic Financial Management) lesson in Financial Statement Analysis. 14 min read, ~2,126 words.
ROA = Net Income / Average Total Assets; ROE = Net Income to common / Average Common Equity. Numerator (NI, EBIT) and denominator (ending vs average) definitions vary, so always state which version you used. DuPont: ROA = Net Margin × Asset Turnover; ROE = ROA × Equity Multiplier. Decompose...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- 2A3
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