Return on Tangible Assets (ROT)
factor.formula
The formula for calculating return on tangible assets is:
The calculation formula for tangible assets is:
The net working capital calculation formula is:
The calculation formula for net fixed capital is:
Formula explanation:
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Earnings Before Interest and Taxes (TTM) for the last 12 months. EBIT is a key indicator of a company's core profitability, excluding the impact of interest and taxes.
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Total tangible assets at the end of the period. Represents the physical assets used by the enterprise for operating activities.
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Net working capital. Measures the difference between a company's short-term assets and liabilities, reflecting its short-term debt-paying ability and liquidity.
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Current assets refer to the assets that can be converted into cash or consumed within one year or a normal operating cycle, such as cash, accounts receivable, inventory, etc.
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Current liabilities refer to debts that need to be repaid within one year or a normal operating cycle, such as short-term loans and accounts payable.
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Net fixed capital refers to the fixed assets of an enterprise, representing physical assets used for long-term business activities, such as factories, equipment, etc.
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Fixed assets refer to tangible assets held by an enterprise for the purpose of producing goods, providing services, leasing or operating and managing, with a useful life exceeding one fiscal year.
factor.explanation
Return on tangible assets (ROTA) is a measure of how efficiently a company uses its tangible assets to create profits. Unlike return on total assets (ROA), ROTA focuses only on tangible assets, thus more accurately reflecting the profitability of a company in terms of its physical capital investment. The higher the index, the stronger the company's ability to use its tangible assets to create profits and the higher its operating efficiency. This factor is often used in quantitative investment to evaluate the quality of a company's fundamentals and screen out investment targets with higher profitability.