Return on assets

Return on assets (ROA) is net income divided by total assets, measuring how efficiently a company turns its entire asset base into profit, independent of how those assets are financed.

ByHoang TruongUpdated July 5, 2026

See it move

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A gauge shows return on assets at 16.4 percent. Panorama Bakery earned net income of €180,000 for the year against average total assets of €1,100,000, the mean of €1,000,000 at the start and €1,200,000 at the end. Every €100 tied up in ovens, vans and inventory produced roughly €16.40 of profit, regardless of how those assets were financed.

Where it fits

SubjectFinancial AccountingCoreTopicFinancial Statement Analysis & RatiosCore

The formula

LaTeX

\text{ROA} = \dfrac{\text{Net income}}{\text{Average total assets}}

Variables

$N I$: Net income (€)
$A T A$: Average total assets (mean of opening and closing balance sheet figures) (€)

Shows how much profit a company earns per euro of assets employed, independent of how those assets are financed.

Check yourself

PracticeCORE

A logistics firm reports net income of €240,000 for the year. Total assets were €1,800,000 at the start of the year and €2,200,000 at the end. Using average total assets, what is the firm's return on assets?

Select an answer to check your understanding.