How it is worked out
Net income for the year divided by total assets (everything the company owns).
How to read it
- It shows how productively all the assets work, whether they were paid for with debt or with shareholders' money.
- Banks and insurers hold very large balance sheets, so theirs is low by nature. It compares best within one industry.
Example
Net income of $80m on $1bn of assets: an ROA of 8%.