ROA

(noun)

The return on assets (ROA) percentage shows how profitable a company's assets are in generating revenue.

Examples of ROA in the following topics:

  • Return on Total Assets

    • The return on assets ratio (ROA) is found by dividing net income by total assets.
    • ROA was developed by DuPont to show how effectively assets are being used.
    • ROA can be broken down into multiple parts.
    • ROA does have some drawbacks.
    • Finally, there is no metric to find a good or bad ROA.

  • Relationships between ROA, ROE, and Growth

    • What is the company's ROA and internal growth rate?
    • ROA = 500,000/3,000,000 = 17% Internal growth rate = 17% x 80% = 13% ROE = 17% x (3,000,000/1,500,000) = 34% Sustainable growth rate = 34% x 80% = 27.2%

  • Return on Investment

    • Return on assets (ROA), return on net assets (RONA), return on capital (ROC) and return on invested capital (ROIC) are similar measures with variations on how 'investment' is defined .
    • ROI and related metrics (ROA, ROC, RONA and ROIC) provide a snapshot of profitability adjusted for the size of the investment assets tied up in the enterprise.
    • Return on assets (ROA), return on net assets (RONA), return on capital (ROC) and return on invested capital (ROIC) are similar measures with variations on how 'investment' is defined.

  • Return on Common Equity

    • Also note that the product of net margin and asset turnover is return on assets, so ROE is ROA times financial leverage.
    • Increased debt will make a positive contribution to a firm's ROE only if the matching return on assets (ROA) of that debt exceeds the interest rate on the debt.

  • Understanding Future Stock Value

    • Similar to ROIC, ROA, expressed as a percent, measures the company's ability to make money from its assets.
    • To measure the ROA, take the pro forma net income divided by the total assets.

  • Profitability Ratios

    • Thus, its ROA = 10000 / 2500 = 4.
    • Return on Assets: The return on assets ratio (ROA) is found by dividing the net income by total assets.
    • The BEP differs from the ROA in that it includes the non-operating income.

  • Basic Earning Power (BEP) Ratio

    • This may seem remarkably similar to the return on assets ratio (ROA), which is operating income divided by total assets.

  • Sample Evaluation

    • ROA (Return on Assets) = Net Income / Total Assets = 1,057 / 13,840 = 7.6%

  • Types of Transactions

    • ROA).

  • Ratio Analysis and EPS

    • Return on assets (ROA ratio or Du Pont Ratio): Net income / Average total assets