ROA (Return on Assets) Calculator
Calculate Return on Assets (ROA) to assess company profitability relative to total assets. Includes comparative benchmarks for small, mid, and large-cap companies.
About
Return on Assets (ROA) is a key indicator of how profitable a company is relative to its total assets. It gives managers, analysts, and investors an idea of how efficient a company's management is at using its assets to generate earnings. A higher ROA indicates more asset efficiency.
Unlike simple profit margins, ROA accounts for the debt and equity capital invested in infrastructure, equipment, and cash reserves. It is particularly crucial for comparing companies in the same industry, where asset requirements are similar. A declining ROA over time can be a red flag for bloated inventory or underutilized resources.
Formulas
The formula divides the Net Income (after taxes) by the Total Assets. For better accuracy, use the average total assets over the period.
Reference Data
| Company Size (Cap) | Year 1 Avg | Year 2 Avg | Year 3 Avg | Year 4 Avg | Year 5 Avg |
|---|---|---|---|---|---|
| Small Cap (<$2B) | 3.5% | 4.1% | 3.2% | 2.8% | 3.9% |
| Mid Cap ($2B-$10B) | 5.2% | 5.8% | 5.5% | 5.1% | 6.0% |
| Large Cap (>$10B) | 7.1% | 7.5% | 6.9% | 6.5% | 7.8% |
| Tech Sector Avg | 9.5% | 10.2% | 9.8% | 8.9% | 11.0% |
| Utility Sector Avg | 2.8% | 2.9% | 3.0% | 2.7% | 3.1% |