Measuring Marketing

Chapter 7 Return on Assets

Measurement Need

The cost of operations has a direct impact on profits. Inefficient operations can place undo stress on company resources, including people and equipment. Management must measure the usefulness and productivity of operating assets due to the cost of the initial investment made to develop them, as well as the ongoing costs. Marketing is accountable since the plans they develop must be feasible from an operational and manufacturing standpoint.

Solutioni

Return on assets (ROA) is a measure of efficiency based on a company’s ability to generate profits from its existing assets.

$ROA=\frac{P_{nbt}}{A}$

Where

ROA = return on assets

Pnbt = net profit before tax

A = assets (assets are invested capital, comprised ...