Return on assets (ROA)

Definition

Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets).

Nearby Terms

Return if Exercised Return of capital Return on assets (ROA)Return on capital employed (ROCE)Return on equity (ROE)

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Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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