This glossary uses Visual Finance™ to bring financial terms to life. Each example shows data from the Round Number Company, a fictional business with simplified figures to make learning easier. For more details, visit 'How to Read Visual Finance'.
Return on Assets ratio: Net Income as a percentage of the Total (average) Assets.
Example: The Round Number CompanyNet Income = 30; Total Assets = 300 Return on Assets = 30/300 = 10 % |
ROA measures how effectively the assets are employed in the business.
Part of Income|Outcome Triangle for Ratio Analysis. See also Return On Sales (ROS) and Return on Net Assets (RONA).
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Calculator for Return On Assets (ROA) Return On Assets (ROA) = Profit / Assets
For a DIY Return on Assets Calculator, for up to 3 companies, go here. |
The above is our generic explanations of common corporate financial terminology. Actual meanings can vary widely from company to company; in order to have the correct internal definition you need to ask your Finance Department, "What do you mean by that?"
term list.