HBR 20-Minute Manager Boxed Set (10 Books) (HBR 20-Minute Manager Series)

Finance Basics

114

Retained earnings. All after-tax income held by a

business (and not paid out in dividends) since its

inception.

Return on assets (ROA). A measure of the productivity

of a company’s assets. To calculate ROA, divide net

income by total assets.

Return on equity (ROE). A measure of the productivity

of a company’s equity. Also known as return on own-

ers’ equity. To calculate ROE, divide net income by

owners’ equity.

Return on sales (ROS). A measure of a company’s over-

all effi ciency in generating profi ts. Also known as net

profi t margin. To calculate ROS, divide net income by

total sales.

Revenue. The fi rst line on an income statement, in-

dicating the value of goods or services delivered to

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