Accounting
Intermediate

Return on Assets (ROA)

How efficiently a company turns its assets into profit.

Formula

ROA=Net IncomeTotal AssetsROA = \dfrac{Net\ Income}{Total\ Assets}

Variables

ROAReturn on assets
Net IncomeBottom-line profit
Total AssetsAll assets

Example

$70k / $500k = 14% ROA

Did You Know?

ROA lets you compare a capital-heavy factory with an asset-light software firm on the same footing.

profitabilityefficiencyassets