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What does "return on assets" mean? What does "return on assets" mean?

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Old Monday, October 25, 2010
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Default What does "return on assets" mean?
What does "return on assets" mean?
Ogra is applying a return on assets with a guaranteed rate of 17 % for SSGCL and 17.5 % for SNGPL.
Please explain in simple words as i dont know the ABC of Economics.
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Old Monday, October 25, 2010
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Default Easy topic
Please check this link
http://en.wikipedia.org/wiki/Return_on_assets
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Old Tuesday, October 26, 2010
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In simplest terms, for your understanding, return on assets (ROA) means "the return/income you obtain by investing in the assets" OR "how much your assets contribute towards your earning".

The formula is:

ROA = Net Income/Total Assets

A company like SNGPL or SSGCL usually invest in its infrastructure (pipe lines, etc.) and the profit it makes by such investment is then analysed by using ROA to determine whether the investor has benefited from its investment in assets.
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Old Tuesday, October 26, 2010
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Quote:
Originally Posted by Omer View Post
In simplest terms, for your understanding, return on assets (ROA) means "the return/income you obtain by investing in the assets" OR "how much your assets contribute towards your earning".

The formula is:

ROA = Net Income/Total Assets

A company like SNGPL or SSGCL usually invest in its infrastructure (pipe lines, etc.) and the profit it makes by such investment is then analysed by using ROA to determine whether the investor has benefited from its investment in assets.

I thank you very very very much, sir. Your last paragraph about SNGPL and SSGCL has cleared the whole picture for me.
Actually i have read a piece in newspaper in which the Ogra policy of guaranteed rate of return on assets for these companies has been criticized because it makes them invest more in infrastructure and network expansion than investing in reducing UFG( unaccounted for gas). I was confused about this point that how rate of return makes them invest in network expansion. Why the companies are expanding their network when the gas supply is already less than its demand. Once again thank you so very much.
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