Financial Measure of the Performance Return on assets(ROA)measures the return earned on each dollar invested by the firm in assets. Earnings before interest Net income [Interest expense x (1 -Tax rate)] ROA Average total assets Average total assets The difference between ROE and ROA is referred to as return on financial leverage (ROFL) ■In2009,R0E=902/5257=172.%, R0A=(902+34(1-0.35)/12813=6.7% ■R0FL=17.2-6.7=10.5% SEIEE AU406 3-5+ - SEIEE AU406  Return on assets (ROA) measures the return earned on each dollar invested by the firm in assets. 3-5 Financial Measure of the Performance  The difference between ROE and ROA is referred to as return on financial leverage (ROFL)