Definition – What is Return on Assets?
Return on Assets is a ratio of net income to total assets. It is listed as a percentage.
Formula – How to calculate ROA
Return on Assets = (Net Income / Total Assets) x 100%
A company has net income of $10,000 and total assets of $12,000.
Return on Assets = ($10,000 / $12,000) x 100% = 0.8333 x 100% = 83.33%
Therefore, this company’s return on assets is 83.33%.
Sources and more resources
- Wikipedia – Return on assets – A short entry on how to calculate return on assets.
- The Balance – How to Calculate Return on Assets (ROA) – A full example on how to calculate return on assets.
- INC Magazine – Return on Assets (ROA) – An encyclopedic entry on return on assets.
- Investopedia – Return on Assets – The formula for return on assets.