return on assets

return on assets
return on assets ( ROA)
A percentage calculated by dividing net income after tax by total assets. Annual income is usually used in the numerator; however, the annualized income for a month, quarter, or half year can be used. Period-end assets is often used in this calculation; however, average assets for the period is more accurate. This ratio is a measurement of how profitably assets are used in an enterprise. Firms in different industries usually have quite different returns on assets. This ratio is best used to compare firms in the same industry. American Banker Glossary
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( ROA)
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). Bloomberg Financial Dictionary

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return on assets reˌturn on ˈassets abbreviation ROA noun [singular, uncountable] FINANCE ACCOUNTING
a company's profit in a particular period of time in relation to the value of its assets, used to judge how well it is using its assets compared to other companies in the same industry:

• It has an annualized return (= for a complete year ) on assets of 1.46%, well below the 3.04% achieved by Spain's most profitable bank.

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   ► See ROA.

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return on assets UK US noun [C or U] (ABBREVIATION ROA)
► FINANCE, ACCOUNTING a company's profit for a particular period compared with the value of its assets (= factories, equipment, etc.) for that period. This shows how effectively the company is using its assets: »

The company had a 1.5% return on assets, a measure of its strong profitability.


Financial and business terms. 2012.

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