Return on Assets (ROA)

Return on Assets (ROA) is a financial metric that measures how efficiently a company uses its assets to generate profit.

It is calculated by dividing net income by total assets, and the result is expressed as a percentage.

A higher ROA indicates that the company is effectively converting its investment in assets into earnings. This metric helps investors and analysts assess how well management is using the company’s resources.

ROA is particularly useful for comparing performance across companies in capital-intensive industries, but it should always be considered in the context of the company’s size, sector, and business model for accurate evaluation.