From data to report in one minute or less. Ajelix BI is launched! 🚀 Get started for free.

Free Return on Assets Calculator Online

Free return on assets calculator online webpage banner by ajelix

The Return on Assets calculator (ROA) is a financial metric used to assess a company’s profitability of total assets. This metric tells you how effectively your company uses resources (assets) to generate profit.

Calculate Return on Assets (ROA)




Return on Assets Formula

ROA = Net Income / Total Assets x 100

  • Net Income: The profit earned after all expenses are paid.
  • Total Assets: Total dollar value of everything the company owns.

What is a good Return Ratio?

A higher ROA is generally considered better, but a “good” ROA can vary depending on the industry. For example, an asset-heavy industry like manufacturing may have a naturally lower ratio than a service-based industry. It’s important to compare a company’s ROA to historical performance or industry benchmarks.

How To Calculate Return on Assets?

Time needed: 3 minutes

Step-by-step guide on how to calculate return on assets (ROA):

  1. Identify Net Income

    Net income represents the company’s profit after all expenses have been paid. On the income statement, net income is usually the last line item.

  2. Identify Total Assets

    Total assets represent the total dollar value of everything a company owns. This includes cash, inventory, property, equipment, and intangible assets like patents.

  3. Calculate the ROA Ratio

    Once you have both figures, you can use the following formula to calculate ROA = Net Income / Total Assets x 100.

  4. Interpret the ROA

    A higher ROA generally indicates better efficiency in using assets to generate profits. However, it’s important to consider industry benchmarks when interpreting ROA.

Difference between ROI and ROA

ROI and ROA are both financial metrics used to assess performance, but they measure different things:

  • ROI (Return on Investment): Measures the profitability of a specific investment. It tells you how much return you get for your money on a particular project or venture.
  • ROA (Return on Assets): Measures a company’s overall efficiency in using its assets to generate profit. It shows how well the company is squeezing profits out of everything it owns.

Here’s a table summarizing the key differences:

FeatureROI (Return on Investment)ROA (Return on Assets)
What it MeasuresProfitability of a specific investmentOverall efficiency in using assets
FocusReturn for a particular projectCompany’s ability to generate profit from assets
Formula Typically Used(Gain from Investment – Cost of Investment) / Cost of InvestmentNet Income / Total Assets
ROI and ROA comparison

Why ROA Matters?

Financial metrics like Return on Assets are crucial for spotting strong investments. Here’s why ROA is a must-consider for your investment strategy:

  • Efficiency Check: reveals how well a company uses its assets to generate profits. A high metric indicates efficient management and potentially, better returns for you.
  • Industry Benchmarking: lets you compare companies within the same industry. This helps identify leaders in asset utilization.
  • Tracking Performance: Monitoring this KPI for small businesses over time shows if a company’s management is improving efficiency.
  • Potential Red Flags: A consistently low ROA, even compared to competitors, might signal underlying issues.
  • Smarter Decisions: Use ROA alongside other metrics to make informed investment choices.

Other calculators

Free present value calculator online, calculate pv for projects and loans banner

Free Present Value Calculator Online: Calculate PV

June 18, 2024
A present value calculator is a tool that helps you figure out how much money you’d need to…
Free future value calculator online banner

Free Future Value Calculator Online: Calculate FV

June 13, 2024
A future value calculator helps you estimate how much an investment will be worth in the future, …
Free IRR calculator online: calculate your internal rate of return banner

Free IRR Calculator: Calculate Internal Rate of Return

June 11, 2024
IRR formula in Excel screenshot from spreadsheet for IRR calculator
Net present value banner

Free NPV Calculator Online: Calculate Net Present Value

June 6, 2024
An NPV calculator is a tool that helps you assess the profitability of an investment by calculati…
Calculate markdown metric with free online calculator banner

Free Markdown Calculator Online

June 4, 2024
A markdown calculator is used by businesses to maximize profits. They track how much you discount…
free clt calculator: calculate customer lifetime value online banner by ajelix

Free CLV Calculator: Calculate Customer Lifetime Value

May 30, 2024
Customer lifetime value calculator, also referred to as CLV calculator or lifetime value (LTV), i…

Setup and monitor your KPIs regularly using Ajelix BI

Ad hoc financial analysis report example from ajelix bi portal

You might also like

Ajelix BI version 2 is launched Ajelix news banner

Ajelix BI Version 2 Is Live: More Analytics & More Power

May 10, 2024
Unleash the true power of your data! 💥 Ajelix, the dynamic AI-powered BI platform built for SMBs,…
generative AI for data analytics banner blog article by ajelix

Generative AI For Data Analytics: What You’re Missing Out

April 18, 2024
Organizations across all industries are turning to data analytics to inform strategic decisions, …
Hoe to calculate business growth rate with examples and formula banner by ajelix

How to Calculate Business Growth Rate? Formula & Examples

April 16, 2024
Whether you’re a seasoned entrepreneur or just starting, measuring progress is vital to ide…
How to calculate average revenue per user formula & meaning example banner

Calculate Average Revenue Per User: ARPU Formula & Meaning

April 11, 2024
The metrics are king, there’s no doubt about it. They tell the story of your company’…
How to calculate revenue growth in Excel with examples and formulas banner by ajelix

How To Calculate Revenue Growth Rate: Formula & Examples

April 9, 2024
Revenue growth rate is a performance indicator, that helps understand if your sales efforts are y…
How to analyze data in Excel spreadsheet banner by author

How To Analyze Data In Excel Spreadsheet

April 4, 2024
Excel is the workhorse of data analysis in countless businesses. It can unlock valuable insights …