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Username: PrettyWoman

Rating:
Guru Stars

Asked to: Anton Luyten

Date Created: 24 Apr 2018
Category 28
Tag Financial
Question What is 'Return on Assets - ROA'?
Advice from Guru
Hi PrettyWoman,

Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA gives a manager, investor, or analyst an idea as to how efficient a company's management is at using its assets to generate earnings. Return on assets is displayed as a percentage and its calculated as:

ROA = Net Income / Total Assets

Note: Some investors add interest expense back into net income when performing this calculation because they'd like to use operating returns before cost of borrowing.

Sometimes, the ROA is referred to as "return on investment".

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