Profit Before Taxes/Total Assets

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Profit Before Taxes/Total Assets

Dictionary Definition

This ratio measures the rate of return on total assets.  It can be used as an indicator for management efficiency.  This ratio is expressed as a percentage.  



Why it Matters to You

If you have fully depreciated assets this will skew the ratio, making it look like the company is performing above the industry average.  This could mean that you were able to take advantage of accelerated depreciation.  Or it could mean that your equipment is older and/or may need to be replaced soon.


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