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Return on assets (ROA) is a financial ratio that indicates how profitable a company is relative to its total assets. Corporate management, analysts, and investors can use the return on assets...
Return on Assets (ROA) is a type of return on investment (ROI) metric that measures the profitability of a business in relation to its total assets. This ratio indicates how well a company is performing by comparing the profit (net income) it’s generating to the capital it’s invested in assets.
Return on assets (ROA) is a profitability ratio that measures how well a company is generating profits from its assets and is an important metric to investors.
Return on assets, or ROA, is a metric used to evaluate how efficiently a company is able to generate profit with the assets it has available. How do I calculate ROA? Return on Assets is calculated by divided a company's net income by its total assets.
The formula to calculate the return on assets (ROA) ratio divides a company’s net income by the average balance of its total assets, i.e. the beginning and ending total assets balance. The higher the ROA ratio, the more efficiently a company’s management team utilizes its total asset base to generate more profits (and vice versa).
What is ROA? This financial definition walks you through using the ROA formula, return on assets ratio interpretation, and when you shouldn’t use it.
The return on assets ratio formula is calculated by dividing net income by average total assets. This ratio can also be represented as a product of the profit margin and the total asset turnover. Either formula can be used to calculate the return on total assets.
Once you have this information, put it into the return on assets formula: Return On Assets = (Net Income / Average Total Assets) x 100. Your total assets value is found in the top section of your balance sheet. Included in total assets are both long and short-term assets.
It’s simple to calculate ROA, as we saw above: Divide a company’s net profit by its total assets, then multiply the result by 100. ROA = (Net Profit / Total Assets) x 100. Public companies...
Return on assets (ROA) is a key gauge of a company's profitability. The ROA ratio measures a company's net income relative to its total assets. A good ROA depends on the company and...