What do you mean by Return on Assets? What does it indicate?

What do you mean by Return on Assets? What does it indicate?

Return on Assets (ROA) measures the profitability of the investments in a firm. It is an indicator of the profitability of a company to its total assets. It gives an idea about the efficiency of the management in using its assets to generate earnings. A higher ROA is always preferred because the company is earning more money on less investment.

Formula to calculate ROA = (Net Profit/ Assets) X 100