ROA - Return on Total Capital (%)
ROA = Profit/Total Assets Total Capital = Equity + Liabilities
ROA abbreviates 'Return on Assets' i.e. Return on Total Capital. The key figure shows the company's profitability on total assets.
The advantage of ROA is that it takes into account the company's indebtedness and provides fairer profitability measures in contrast to ROE.
Things to keep in mind
- A high value is positive.
- ROA calculates liabilities and thus provides a good measure of the company's return.
- Good for companies with high mortgages.