I’m working on a finance discussion question and need an explanation and answer to help me learn.
When calculating return on net operating assets, analysts sometimes make adjustments to the net operating asset base used in the denominator of the ratio. Three possible adjustments are listed below. Explain what these adjustments are, and discuss the merits of these adjustments. References are need if any.
Non-operating asset adjustment
Intangible asset adjustment
- Accumulated depreciation adjustment