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Return on investment profitability ratios measure income relative to assets, equity, or total capital employed by the company. For operating ROA, returns are measured as operating income, that is, prior to deducting interest on debt capital. For ROA and ROE, returns are measured as net income, that is, after deducting interest paid on debt capital. For return on common equity, returns are measured as net income minus preferred dividends (because preferred dividends are a return to preferred equity).
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