Return on Assets
ROAHow much profit the company earns from its assets
Definition
Return on Assets measures net income against total assets. It shows how efficiently the firm turns factories, inventory, cash, and receivables into profit. Asset-heavy businesses naturally post a lower ROA than asset-light ones.
Net Income ÷ Average Total Assets
Example
If a company earns $10B on $50B of assets, ROA is 20%.
Typical range
Software: often 10%+; industrials and retailers: lower is normal