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Pep Boys - Manny Moe & Jack (NYSE:PBY)
Return on Assets
0.40% (As of Apr. 2014)

Return on assets is calculated as net income divided by its total assets. Pep Boys - Manny Moe & Jack's annualized net income for the quarter that ended in Apr. 2014 was $6 Mil. Pep Boys - Manny Moe & Jack's total assets for the quarter that ended in Apr. 2014 was $1,593 Mil. Therefore, Pep Boys - Manny Moe & Jack's annualized return on assests (ROA) for the quarter that ended in Apr. 2014 was 0.40%.

PBY' s 10-Year Return on Assets Range
Min: -2.68   Max: 5.54
Current: 0.43

-2.68
5.54

During the past 13 years, Pep Boys - Manny Moe & Jack's highest Return on Assets (ROA) was 5.54%. The lowest was -2.68%. And the median was 1.26%.

PBY's Return on Assetsis ranked higher than
53% of the 1079 Companies
in the Global Specialty Retail industry.

( Industry Median: 4.38 vs. PBY: 0.43 )

Definition

Pep Boys - Manny Moe & Jack's annualized Return on Assets (ROA) for the fiscal year that ended in Jan. 2014 is calculated as:

Return on Assets (ROA) (A: Jan. 2014 )=Net Income (A: Jan. 2014 )/Total Assets (A: Jan. 2014 )
=6.865/1605.481
=0.43 %

Pep Boys - Manny Moe & Jack's annualized Return on Assets (ROA) for the quarter that ended in Apr. 2014 is calculated as:

Return on Assets (ROA) (Q: Apr. 2014 )=Net Income (Q: Apr. 2014 )/Total Assets (Q: Apr. 2014 )
=6.432/1592.951
=0.40 %

* 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 is used. The total assets are from the end of year data. Strictly speaking, average total assets over the fiscal year should be used. In calculating the quarterly data, the Net Income data used here is four times the quarterly (Apr. 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: Apr. 2014 )
=Net Income/Total Assets
=6.432/1592.951
=(Net Income / Revenue)*(Revenue / Total Assets)
=(6.432 / 538.821)*(538.821 / 1592.951)
=Net Profit Margin*Asset Turnover
=0.0119*0.3383
=0.40 %

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

Pep Boys - Manny Moe & Jack Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
ROA 1.26-2.06-0.14-2.59-1.961.542.351.770.800.43

Pep Boys - Manny Moe & Jack Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
ROA -1.080.247.84-1.68-3.640.961.360.24-0.840.40
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