What exactly is the difference between return on assets and return on capital?

First of all, you should be clear that the difference between assets and capital, in the balance sheet, the left part belongs to the asset class account, and the right part belongs to the liability and owner's equity part, because the owner's equity is owned by the shareholders and can be understood as capital.

Secondly, for this kind of financial analysis indicators, I believe that financial management books have been very clear, it is good to be able to understand, for the lack of experience or beginners, if you really can't understand, there is a relatively simple way to remember, that is, the front is generally the denominator, followed by the numerator.

For example, the rate of return on assets, the asset is the denominator, the reward is the numerator, what is the reward, of course, is the profit. The rate of return on capital is the denominator and the profit is the numerator.

As you can see from above, the numerator is the same, but the denominator is different, one is an asset and the other is a capital. Generally speaking, assets and capital are averaged, while profit is net profit. The specific formula can be found anywhere, so I won't list it.

In fact, the rate of return and the rate of profit are a problem, the rate of return or the rate of profit, which is generally equal to the net profit, refers to the profitability of the company.

Therefore, the return on assets is the profitability of the company's use of assets, and the greater the value, the better the asset utilization; The rate of return on capital is the operating results obtained by using all the capital, and the greater the value, the more the capital is fully utilized.

One is the return on assets and the other is the return on capital.

Return on investment = (profit after tax Total investment) * 100%.

Return on assets = (after-tax profit average total assets) * 100%.

The return on investment is calculated based on the total amount invested (owner's equity).

Return on assets is calculated on the basis of average total assets.

In general, the return on investment is greater than the return on assets.

The increase in investor equity is actually the principal amount of the loan.

The cash rate of return is calculated after deducting interest and loan principal. The return on investment is deducted from interest, but not from the principal of the loan.

There are two differences: one is the increase in property value, and the other is the loan principal (equity increase or decrease).

Not the amount. Generally speaking, the total rate of return refers to the return on investment, which is aimed at the investment of enterprises, and simply put, the total return of the total investment.

Return on total assets is in the course of business operations. Total Revenue: Total Assets.

In the case of fixed income**, the interest rate generally refers to the coupon rate.

Return on investment refers to the rate of return obtained by dividing the amount of money realized and held to maturity by the cost of the purchase after purchase.

The former is based on the face value of the ** itself, and the latter is based on the purchase cost.

The former is based on a fixed period of time, while the latter is based on the entire investment cycle.

The rate of return on investment type capital is publicized as:

ROI) = annual profit or average annual profit 100% of the total investment, as can be seen from the formula, enterprises can improve profit margins by reducing the cost of sales; Improve asset efficiency to increase ROI. The advantage of return on investment (ROI) is that it is simple to calculate; The disadvantage is that the time value of funds is not considered, and the impact of the length of the construction period and the different investment methods and the presence or absence of the first amount on the project cannot be correctly reflected, and the comparability of the calculation caliber of the numerator and denominator is poor, and the net cash flow information cannot be directly used.

Red Star Macalline shop, a very famous shop. The developer leases for 15 years, the total price is 20w, the down payment is 10w, the monthly rent is paid monthly, the first five years return to 40%, and the last ten years, 19 shares. You 9, you can also renew it when it expires, which is a very cost-effective investment.

1. In general, it is good, but the personal business mode is different, so it is not certain, but as long as there is perseverance, it is still good.

2. For some small and medium-sized investors and first-time entrepreneurs, they have neither much entrepreneurial experience nor strong financial strength, and the dry cleaning industry is the most suitable for them with simple operation and small investment.

3. It can be located at the entrance of the residential area or the main traffic road. The target customers of dry cleaners are stable residents, and the routes of residents entering and leaving the community should be considered to grasp the flow of customers. Most of the customers come from within 200 meters of the store, so within a 500-meter radius of the store location, there are some requirements for the permanent resident population, generally speaking, there should not be less than 5,000 people.

If you want to manage money, I feel that Haoli.com is more reliable, and there are many advantages, quadruple security guarantees, and the offline scale is relatively mature. . .

Return on capital is the quotient of net profit provided in the income statement for a settlement period divided by the total amount invested, i.e. the ratio of net profit to total investment. The purpose of all business operations is to obtain reasonable profits. Indicates the level of profit margin, often referred to as "profitability".

By comparing and analyzing the return on capital in different accounting periods, or among peers in the same settlement period, we can obtain the size of the "profitability" of the enterprise, and can understand the trend of profit and loss of the enterprise, and provide useful reference data for business decision-making.

Extended Material: Capital (capital goods, capital equipment), material wealth of economic value or social relations of production.

In Western economic theory, capital is a part of inputs (means of production), which include: labor, land, and capital.

Capital refers to the factors of production that are produced, and it is a durable good. According to today's mainstream macroeconomic view, capital can be divided into physical capital, human capital, natural resources, and technological knowledge.

1. Physical capital: (physical capital) Physical capital refers to the stock of equipment and buildings used to produce goods and services.

2. Human capital: (human capital) Human capital is a term used by economists to refer to the knowledge and skills that workers acquire through education, training, and experience.

3. Natural resources: (natural resources) production inputs provided by nature.

4. Technical knowledge: (technological knowledge) the understanding of the best way to produce goods and services.

According to the viewpoint of Marxist political economy, capital is a kind of social power formed by the stacking of surplus labor, and it is a specific political and economic category in the capitalist filial piety relations of production, which embodies the exploitation relationship between the capitalists and the workers, so capital is not entirely a stock concept. However, when we study the accounting of the economic stock of the macro shed belt separately today, "capital" generally refers to all the tangible, intangible, financial and human capital invested in the reproduction process. From the perspective of investment activities, capital is linked to flow accounting, and as the precipitation or accumulation result of investment activities, capital is linked to stock accounting.

Return on equity and return on equity are both indicators that measure a company's return on profits. What is return on net assets, return on net assets, also known as return on equity, is the ratio of the total remuneration obtained by an enterprise to the average total assets in a certain period. It is an index that reflects the effect of comprehensive utilization of enterprise assets, and is also an important indicator to measure the profitability of an enterprise by using the total equity of creditors and owners.

The higher the index, the better the asset utilization efficiency, the stronger the profitability of the enterprise, and the higher the level of operation and management. Return on Assets = Return on Total Assets = (Net Profit + Interest Expense + Income Tax Expense) Average Total Assets 100% = Total EBIT Average Total Assets 100% of which, Average Total Assets = (Total Assets at the Beginning + Total Assets at the End of the Period) 2. This indicator reflects the ability of a company to generate income from its total assets.

However, the funds occupied by assets include two parts, one is the funds belonging to shareholders, that is, the owner's equity (or shareholders' equity, the same below), which is the company's own funds, and the other is the funds provided by creditors, borrowing funds for the enterprise, although this part of the funds can be temporarily occupied by the enterprise, but it needs to be repaid or even need to pay interest. Therefore, the return on assets does not reflect the ability of the company's own funds to obtain income. Return on equity = net profit net assets 100%; Return on Net Assets Bridge Ratio = (Total Profit + Interest Expense) Average Net Assets * 100%.

The significance of return on net assets is an indicator that reflects the ability of a company to generate income from its total assets. However, the funds occupied by assets include two parts, one is the funds belonging to the shareholders, that is, the owner's equity (or shareholders' equity, the same below), which is the company's own funds, and the other is the funds provided by creditors, which are borrowed for the enterprise. Therefore, the return on assets does not reflect the ability of the company's own funds to obtain income.

Net assets = assets - liabilities; Return on equity = net profit net assets 100%; Return on equity = (total profit + interest expense) average net assets * 100%. Return on net assets, also known as return on equity, is the ratio of the total remuneration obtained by an enterprise to the average total assets in a certain period. I believe that after reading the above introduction, everyone knows the return on net assets.

1. The return on total assets analyzes the profitability of the enterprise on the basis of the return on investment, which is the ratio between the return on investment and the total investment. The return on investment of an enterprise is the sum of the profit before the payment of interest and income tax, and the total investment is the average total assets of the current period.

2. The return on total assets is also called the asset income rate. It refers to the ratio of the total remuneration obtained by Sun Xun enterprises to the average total assets in a certain period of time. It represents the overall profitability of all assets of the enterprise, including net assets and liabilities, and is used to evaluate the overall profitability of the enterprise using all the assets of the company, and is an important indicator to evaluate the operating efficiency of the enterprise's assets.

1. Return on net assets refers to the ratio of net profit to net assets of an enterprise in the current period, which is the core indicator reflecting the profitability of an enterprise. The higher the indicator, the more net profit, the better the profitability of the enterprise.

The return on total assets refers to the rate of return on all assets used by the enterprise, which reflects the total results of the use of all assets of the enterprise. The return on total assets reflects the efficiency of the company's assets and is a highly comprehensive indicator. The higher the indicator, the higher the utilization efficiency of the enterprise's assets, and the stronger the profitability of the enterprise's assets, the higher the indicator, the better.

2. Return on total assets = EBIT 100% of average total assets

Return on equity = net profit Average gross net assets 100%.

Average total assets refers to the average of the beginning and end of the period of total assets of the calculation object in a certain period. Calculation formula: average total assets = (total assets at the beginning of the calculation period + total assets at the later stage) 2

EBIT is the profit without deducting interest or income tax, EBIT = net profit of the enterprise + interest expense paid by the enterprise + income tax paid by the enterprise.

Return on total assets ratio (ROA) is one of the important indicators used to evaluate the operational efficiency of enterprise assets. It calculates the return on investment generated by the total assets of the enterprise, which can reflect the efficiency of the enterprise's asset utilization and the level of economic profits. ROA is one of the most important indicators commonly used in corporate financial analysis and decision-making.

ROA is calculated as net profit and total assets, where total assets are made up of tangible, intangible, and other assets. Net profit refers to the profit left after deducting all expenses and income tax of the enterprise. The higher the ROA mark, the better the economic benefits achieved by the enterprise in the use of total assets.

As an index calculated by comprehensively considering various factors of enterprise production and operation, ROA can reflect the operating conditions of enterprises from multiple perspectives. First of all, ROA can reflect the profitability of a business. With the improvement of ROA, it indicates that the economic benefits obtained by the enterprise in the use of assets are also better, that is, the profitability of the enterprise is stronger.

Secondly, ROA can evaluate the efficiency of the operation of the company's assets. When the ROA is high, it means that the enterprise is very efficient in the use of assets and can use all assets to generate higher profits. Finally, ROA is also one of the important indicators to measure the long-term competitiveness and sustainable growth of enterprises.

ROA is a very important financial analysis tool for investors and analysts. By calculating ROA, we can see the changes in the production and operation of the enterprise, and help investors and analysts judge whether the enterprise has development potential, so as to make correct investment decisions. In addition, ROA is also an important indicator of the financial health of a business.

If the ROA value is low, it means that the enterprise has problems such as idle assets or inefficient utilization in the process of operation.

It should be noted that there will be large differences in ROA values between different industries and enterprises, and they cannot be directly compared. Therefore, when using ROA indicators for enterprise analysis, it is necessary to consider various factors such as industry, enterprise scale, and market environment. At the same time, ROA should also be used in conjunction with other indicators, such as market share, cash flow, etc., to fully reflect the company's operating performance.

In short, ROA, as one of the indicators for the comprehensive evaluation of the operational efficiency of enterprise assets, plays an important role in the financial analysis and investment decision-making of enterprises. By monitoring changes in ROA, we can effectively assess the financial status, profitability and asset operation efficiency of enterprises, and provide investors and analysts with correct analytical decisions.