What is the Definition of A Return on Assets, or ROA?

Return on Assets, or ROA, is an indicator of the profitability of a firm relative to the assets of the firm. The calculation for ROA is:

• Net Income / Total Assets

Return on Assets is used to assess how efficiently the assets of the firm are being used to produce profits, and it can be compared between similar companies to give an idea of the relative performance and efficiency of a firm. The higher the return on assets of a firm, the more efficiently it is using its assets.