MBA accounting · Modules 1 + 2

Make the numbers stick.

Short, no-typing drills for ratios and financial statements. Reveal, choose, repeat—and let recognition become recall.

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The concept to own

It is not really “averaging two years.” You are averaging two dates—the beginning and end of the same year whose income you are measuring.

Flow÷Average stock=Return

Dec. 31, 2024$80,000Beginning assets

2025 net income: $10,000

Dec. 31, 2025$120,000Ending assets

Step 1

($80,000 + $120,000) ÷ 2 = $100,000 average assets

Step 2

$10,000 ÷ $100,000 = 10% ROA

Best match: a full year of income over the assets available during that year.

The same logic applies to ROE: divide the year’s net income by average beginning-and-ending shareholders’ equity.

One-screen refresher

One-date snapshot of resources and claims.

Assets = Liabilities + EquityCash · Inventory · Payables · Debt · Retained earnings

Performance across a period of time.

Revenues − Expenses = Net incomeSales · COGS · Wages · Rent · Depreciation

Why cash changed during the period.

Operating + Investing + FinancingBeginning cash + Net change = Ending cash