Plain-English definitions, reviewed by an independent investor
ROA (Return on Assets)
ROA shows how efficiently a company turns its assets into profit.
ROA shows how efficiently a company turns its assets into profit.
ROA = Net Income ÷ Total Assets × 100%
Why it matters
It reveals how good management is at wringing profit from what the business owns.
Common confusion
ROA varies hugely by industry; banks look nothing like software firms, so compare within a sector.
Frequently Asked Questions
What is a good ROA?
Above 5% is often decent, but the right bar depends on the industry’s typical asset weight.
Why does ROA matter?
It catches companies that look profitable yet sit on lazy, unproductive assets.