Earnings to Total Assets Definition and Explanation

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Quick Definition

Measures the productive ability of all a company’s assets.

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Earnings to Total Assets Formula

Explanation of Earnings to Total Assets

The Earnings to Total Assets ratio compares a company’s Earnings Before Income Taxes to its Total Assets, measuring the productivity of the company’s assets.

Importance of Earnings to Total Assets

An increasing Earnings to Total Assets ratio is generally a positive sign, showing the company is producing more earnings with its assets. This ratio can be readily compared to other companies and industry averages to gain a sense of how productive the company really is.