- Return on assets is a measure that shows the profitability of a company in relation to its total assets.
- ROA can be used by management, analysts and investors to determine whether a company is effectively using its assets to generate a profit.
- You can calculate a company’s ROA by dividing its net income by its total assets.
- It is always better to compare the ROA of companies in the same industry because they will have the same asset base.
- ROA takes into account the company’s debt, but return on equity does not.