Measure how efficiently a company uses all its assets to generate net income — useful for comparing companies of different sizes.
Net Income: Company's profit after all expenses and taxes
Total Assets: Sum of all company assets (current + non-current)
Average Assets: More accurate as it accounts for asset changes during the period
Return on Assets (ROA) measures how efficiently a company uses its assets to generate profit. It shows how much profit a company earns for every dollar of assets.
Key Benefits:
Note: ROA varies significantly by industry. Capital-intensive industries (manufacturing, utilities) typically have lower ROA than asset-light industries (software, services).
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