This section measures how effectively your company is utilizing its gross fixed assets. This section can analyze your company's fixed asset levels and profitability to make suggestions as to whether or not you should acquire more assets to boost productivity, or if you can grow a bit more with your current resources. It can predict improvements in net margins, a signal of efficiency, and determine the strength of your business' return on assets (ROA) value and make predictions as well.
Here are two major measurements you will discover in this section of your performance review:
- Return on Equity= Net Income / Total Equity: This measure shows how much profit is being returned on the shareholders' equity each year. It is a vital statistic from the perspective of equity holders in a company. The higher the better.
- Return on Assets= Net Income / Total Assets: This calculation measures the company's ability to use its assets to create profits. Basically, ROA indicates how many cents of profit each dollar of asset is producing per year. It is quite important since managers can only be evaluated by looking at how they use the assets available to them. The higher the better.