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Return On Assets - ROA
What does it mean?
A useful indicator of how profitable a company is relative to its total assets. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as Return on Investment.
Note: Some people add interest expense back into net income when performing this calculation because it measures operating returns before cost of borrowing.
In Other Words...
This tells you what earnings were generated from invested capital (assets). ROA for public companies can vary substantially, depending on the industry they are in.
Related Links
ROA, on the Way - Do you rely too heavily on ROE? Consider using return on assets for a more complete picture.
Related Terms
Assets | Du Pont Identity | Earnings | Return on Equity - ROE | Return on Net Assets - RONA
1 |
A | B |
C | D |
E | F |
G | H |
I | J |
K | L |
M | N |
O | P |
Q | R |
S | T |
U | V |
W | X |
Y | Z
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