Return on Assets (ROA)
Net income divided by total assets.
ROA measures how efficiently a company uses its total assets to generate profit. Unlike ROE, it is not affected by leverage, making it useful for comparing capital-intensive businesses. Higher ROA indicates more productive use of assets.
Formula
Related Terms
Return on Equity (ROE)
Net income divided by shareholders' equity — the return to equity investors.
Return on Invested Capital (ROIC)
NOPAT divided by invested capital.
Asset Turnover
Revenue divided by total assets.
Market Capitalization
Share price multiplied by shares outstanding — the total equity value.
Enterprise Value (EV)
Market cap plus net debt — the total acquisition value of the business.
P/E Ratio
Share price divided by earnings per share — how much you pay per dollar of profit.