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Forest City Enterprises Inc (NYSE:FCE.A)
Return on Assets
0.03% (As of Sep. 2014)

Return on assets is calculated as net income divided by its average total assets. Forest City Enterprises Inc's annualized net income for the quarter that ended in Sep. 2014 was $3 Mil. Forest City Enterprises Inc's average total assets for the quarter that ended in Sep. 2014 was $8,380 Mil. Therefore, Forest City Enterprises Inc's annualized return on assests (ROA) for the quarter that ended in Sep. 2014 was 0.03%.

FCE.A' s 10-Year Return on Assets Range
Min: -1.05   Max: 2.44
Current: 0.84

-1.05
2.44

During the past 13 years, Forest City Enterprises Inc's highest Return on Assets (ROA) was 2.44%. The lowest was -1.05%. And the median was 0.75%.

FCE.A's Return on Assetsis ranked higher than
52% of the 1579 Companies
in the Global Real Estate - General industry.

( Industry Median: 3.29 vs. FCE.A: 0.84 )

Definition

Forest City Enterprises Inc's annualized Return on Assets (ROA) for the fiscal year that ended in Jan. 2013 is calculated as:

ROA=Net Income (A: Jan. 2013 )/( (Total Assets (A: Jan. 2012 )+Total Assets (A: Jan. 2013 ))/ 2 )
=36.425/( (10504.283+10612.432)/ 2 )
=36.425/10558.3575
=0.34 %

Forest City Enterprises Inc's annualized Return on Assets (ROA) for the quarter that ended in Sep. 2014 is calculated as:

ROA=Net Income (Q: Sep. 2014 )/( (Total Assets (Q: Jun. 2014 )+Total Assets (Q: Sep. 2014 ))/ 2 )
=2.744/( (8551.521+8208.93)/ 2 )
=2.744/8380.2255
=0.03 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

In the calculation of annual return on assets, the net income of the last fiscal year and the average total assets over the fiscal year are used. In calculating the quarterly data, the Net Income data used here is four times the quarterly (Sep. 2014) net income data. Return on Assets is displayed in the 10-year financial page.


Explanation

Return on assets (ROA) measures the rate of return on the total assets (shareholder equity plus liabilities). It measures a firm's efficiency at generating profits from shareholders' equity plus its liabilities. ROA shows how well a company uses what it has to generate earnings. ROAs can vary drastically across industries. Therefore, return on assets should not be used to compare companies in different industries. For retailers, a ROA of higher than 5% is expected. For example, Wal-Mart (WMT) has a ROA of about 8% as of 2012. For banks, ROA is close to their interest spread. A bank’s ROA is typically well under 2%.

Similar to ROE, ROA is affected by profit margins and asset turnover. This can be seen from the Du Pont Formula:

Return on Assets (ROA)(Q: Sep. 2014 )
=Net Income/Average Total Assets
=2.744/8380.2255
=(Net Income / Revenue)*(Revenue / Average Total Assets)
=(2.744 / 938.972)*(938.972 / 8380.2255)
=Net Profit Margin*Asset Turnover
=0.29 %*0.112
=0.03 %

Note: The Net Income data used here is four times the quarterly (Sep. 2014) net income data. The Revenue data used here is four times the quarterly (Sep. 2014) revenue data.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Be Aware

Like ROE, ROA is calculated with only 12 months data. Fluctuations in the company’s earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective. ROA can be affected by events such as stock buyback or issuance, and by goodwill, a company’s tax rate and its interest payment. ROA may not reflect the true earning power of the assets. A more accurate measurement is Return on Capital (ROC).

Many analysts argue the higher return the better. Buffett states that really high ROA may indicate vulnerability in the durability of the competitive advantage.

E.g. Raising $43b to take on KO is impossible, but $1.7b to take on Moody’s is. Although Moody’s ROA and underlying economics is far superior to Coca Cola, the durability is far weaker because of lower entry cost.


Related Terms

Return on Equity, Return on Tangible Equity, Return on Tangible Assets, Return on Capital, Return on Capital - Joel Greenblatt, Net Income, Total Assets


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Forest City Enterprises Inc Annual Data

Jan04Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13
ROA 0.781.291.092.090.55-1.05-0.260.49-0.780.34

Forest City Enterprises Inc Quarterly Data

Jul12Oct12Jan13Mar13Apr13Jul13Oct13Mar14Jun14Sep14
ROA -1.64-0.042.20-1.48-1.46-0.616.120.68-4.250.03
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