Introduce young economists to return on asset with this clip which begins with the various theories on calculating ROA. Sal writes out four formulas and explains why he uses the last one: EBIT divided by assets. He breaks down EBIT and contrasts it with operating profit, which is very similar and used in another formula. Sal makes a case for using EBIT to calculate ROA, and then briefly covers the significance of this percentage to investors. He also identifies the top and bottom line in his previous financial statement breakdown, using these numbers to explain why he doesn't use the other formulas. The next video outlines this choice in more detail.
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