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This ROA Discussion 1, Stocks and Bonds, Finance and Capital Markets instructional video also includes:
Introduce young economists to the concept of return on assets with this clip, which begins with an overview of various theories on calculating ROA. Sal writes out four formulas and explains why he uses the last one: EBIT divided by assets. He breaks down EBIT and contrasts it with operating profit, which is very similar and used in another formula. Sal makes a case for using EBIT to calculate ROA, and then briefly covers the significance of this percentage to investors. He also identifies the top and bottom line in his previous financial statement breakdown, using these numbers to explain why he doesn't use the other formulas. The next video provides a more detailed explanation of this choice.
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