Return on Assets

Return on Assets (ROA) measures how effectively a company uses its assets to generate profit. It is calculated by dividing the net income (profit) by the total assets, then multiplying by 100 to get a percentage. A higher ROA indicates that the company is more efficient at converting its assets into earnings, while a lower ROA suggests less efficient use of assets. Essentially, ROA shows how well a company is turning what it owns into profits, helping investors and management assess operational performance.