Claire Boyte-White is the lead writer for NapkinFinance.com, co-author of I Am Net Worthy, and an Investopedia contributor. Claire's expertise lies in corporate finance & accounting, mutual funds ...

What is Return on Assets (ROA)? Not all profit means the same thing. If a kid's lemonade stand generates $1,000 in profit in one day, for example, that's likely a more impressive use of resources ...

ROA = (Net Profit / Average Assets) x 100 To continue the example from above, you would average the value of the widget manufacturer’s assets from 2020, discovering that its average asset value ...

However, ROA doesn’t exist in a vacuum, and it isn’t an absolute measure. Different industries, for example, tend to have ...

ROA is calculated by dividing a company’s net income by total assets: Let us take an actual historical example to illustrate how to calculate ROA using Excel: On March 31, 2015, Netflix Inc ...

For example, a company with $2 million in net income and $20 million in assets has an ROA of $2 million / $20 million = 10%. This means that for every dollar of assets, it generates 10 cents of ...

You have to remember that banks are much more highly leveraged than an ordinary company, like a grocery store for example. Because of this, they are going to run much lower return on assets ...

Return on assets formula. Example of how to calculate return on assets. Frequently asked questions about return on assets. The significance of return on assets. Calculating ROA using net income ...

Quick tip: If a company's ROA is increasing over time, it's usually a good sign that the efficiency of its operations is improving. Here's an example of how to use data from Nike's financial ...

The best choice will ideally increase productivity and income as well as reduce asset costs, resulting in an improved ROA ratio. For example, say that a small manufacturing company with a current ...