| Return On Assets - ROA | |
 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 investors add interest expense back into net income when performing this calculation because they'd like to use operating returns before cost of borrowing. |
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 ROA tells you what earnings were generated from invested capital (assets). ROA for public companies can vary substantially, depending on the industry they are in. |
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 Ratio Analysis Tutorial - If you don't know how to evaluate a company's present performance and its possible future performance, you need to learn how to analyze ratios. ROA On The Way - Do you rely too heavily on ROE? Consider using return on assets for a more complete picture. Understanding The Subtleties Of ROA Vs ROE - Both measure performance, but sometimes they tell a very different picture. We explain why. |
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Related Terms
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