Use this ROA (return on assets) calculator to calculate quickly and easily the ROA by inputting net income and total value of any company or project assets.
Return on Assets Calculator
ROA: –
ROA Formula
You can use this Return on assets calculator with the ROA (Return on Assets) Formula Which is:
ROA = Net Income / Total Assets
Both inputs are in one currency, and the output is ratio. When the value is in percentage, you have to multiply with 100 of the ratio.
How do you calculate Return on assets?
ROA — or Return on Assets — is a measure that gives the perception of organizational/project efficiency on the total capital assets. It is worked out as the net income of the company divided by total asset worth.
To find ROA, just put the correct values in the formula and calculate the answer using a calculator. For example, for a company that has a profit (net income) of $100k for the year and uses $500k in assets to generate that profit, an ROA would be 1/5 or 20%. In other words, one unit of value is created for every five units of capital assets used by the company.
Of course, total liabilities and shareholders’ equity are total assets that must be turned over by the arithmetic average instead of Southwark in their calculation because total assets comprise total liability + shareholder equity statement. This means that the company is producing more value with its assets than it is eating away capital, a positive ROA.
If you are also the company’s one and only investor, the Return on assets (ROA) is the same as your Return on investment (ROI). So, you can use either an ROA Calculator or an ROI calculator for the same.
What is a good return on assets?
A ROA of 5% is good in most mature businesses with low risk, one of the better figures you could reasonably hope for on an annual basis. On the other hand, high-risk and high-volatility investments are typically assumed to deliver a return of 10%, 20%, or even more to justify the risk. What is good is relative, and it could be anything: niche-specific, competition-dependent, perceived risk, and investor time preferences, among others.
ROA is a useful metric to compare companies when they manage under approximately similar conditions, for the most part within the same industry, geographic location, and legal/regulatory environment. ROA becomes less valuable because a) the more diverse companies are, you have to look at some other metrics besides the ROA.