Return on assets compares earnings with the asset base that supports them.
Return on assets compares earnings with the asset base that supports them.
| Input | What it means |
|---|---|
| Net Income | Earnings after the relevant expenses, interest and taxes for the reporting period. |
| Total assets | Use the measured or stated value for this item, with the unit or category shown beside the field. |
Income of 20,000 on assets of 250,000 gives ROA=8%.
Compare the result with the underlying statement, budget or proposed transaction. It is most useful when every amount uses the same reporting period and the same accounting definition.
Use one consistent period for every amount and rate in the relationship. If a form specifies an annual rate or a monthly amount, follow that label rather than mixing time periods.
Only the costs and taxes represented by the inputs and formula are included. A real transaction can include other charges, so compare the estimate with the underlying agreement or statement.