Return on Assets (ROA)

ROA = Net Income / Avg Total Assets. Profitability per dollar of all assets.

Inputs

Result

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How to use this calculator

  • Net income + average total assets.
  • Compare across same-industry peers.

About this calculator

ROA measures how productively a company uses its asset base. Banks and insurance: 1-2%. Industrial: 4-8%. Tech: 10-20%. Apple/Microsoft: 15-25%. ROA × leverage (assets/equity) = ROE. So a 5% ROA on 4× leverage = 20% ROE. Capital-intensive industries (utilities, telecom, airlines) have low ROA but acceptable ROE due to leverage.

Frequently asked

ROA vs. ROE?+
ROA: per dollar of all assets. ROE: per dollar of equity. ROA × leverage = ROE.
Industry norms?+
Banks: 1-2%. Insurance: 1%. Industrials: 5-10%. Tech: 10-20%. Real estate (REIT): 2-5%.
Why is bank ROA so low?+
Banks have huge balance sheets (deposits = liabilities, loans = assets). High leverage means low ROA + reasonable ROE.
ROIC vs. ROA?+
ROIC (Return on Invested Capital) = NOPAT / (debt + equity − cash). More precise — excludes excess cash.
When does ROA ≈ ROE?+
Zero-debt company: D/E = 0, leverage = 1, ROA = ROE. Rare in practice.

Related calculators

Return on Equity (ROE)
ROE = Net Income / Avg Shareholders' Equity. Profitability per dollar of equity.
EBITDA Calculator
EBITDA = Net Income + Interest + Tax + D&A. Operating earnings before financing + non-cash items.
Free Cash Flow (FCF)
FCF = EBIT(1−T) + D&A − CapEx − ΔNWC. Cash available to all capital providers.
Current Ratio
Current ratio = Current Assets / Current Liabilities. Liquidity benchmark.
Debt-to-Equity Ratio
D/E = Total Debt / Total Equity. Leverage relative to ownership.
WACC Calculator
WACC = (E/V)·Re + (D/V)·Rd·(1−T). Blended cost of capital weighted by debt + equity.

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