Return on Assets
Formula: Return on Assets = Net Income / Average Total Assets
Return on Assets (ROA) is a financial ratio that indicates how profitable a company is relative to its total assets. It measures how efficient management is at using its assets to generate earnings. ROA is a crucial metric for comparing the profitability of companies in the same industry. A higher ROA shows a more efficient use of company assets in generating income, which is a key factor for investors and analysts in evaluating company performance.
Tags: Finance, Profitability, ROA