Return on Assets
Return on assets (ROA) is the percentage obtained by dividing a company's annual earnings by its total assets. This is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient the management is at using its assets to generate earnings. ROA also tells you which earnings were generated from invested capital (assets). ROA for public companies can vary substantially and will be highly dependent on the industry. This is why when using ROA as a comparative measure, it is best to compare it against a company's previous ROA numbers or the ROA of a similar company.
Calculated as: (Net profit ÷ Total assets) x 100.