Return on AssetsView Financial Glossary Index
Return on Assets (ROA) shows the rate of return (after tax) being earned on all of the firm's assets regardless of financing structure (debt vs. equity). It is a measure of how efficiently the company is using all stakeholders' assets to earn returns.
Because ROA can differ significantly across firms, ROA is often used to compare a company over time or against companies that have similar financing structures.
The most common accounting definition for Return on Assets is:
Return on Assets (ROA) = [Net Income + (Interest Expense x (1 - Tax Rate)) + Minority Interest) / (Average Total Assets)
Where Average Total Assets = (Assets at the beginning of the reporting period + Assets at the end of the reporting period) / 2
YCharts calculates Return on Assets as:
ROA = Trailing 12 Month Net Income / Total Assets from the most recent quarter