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Return on assets ratio calculator
The return on assets ratio measures how well a company's
management team is doing its job. A comparison of net income and
average total assets, the ROA ratio reveals how much income management
has been able to squeeze from each dollar's worth of a company's
assets. Investors and potential investors use this ratio to evaluate
a company's leadership.
Many companies, particularly those involved in manufacturing
and selling seasonal goods, experience wide swings in assets during
the course of a year. To accommodate for these swings and produce
a more accurate ratio, the total assets figure used to calculate
the ROA should be an average of a firm's assets at the beginning
and end of the statement period.
The formula: Net income divided by average
total assets
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How to use this calculator
You'll find the numbers you need
to calculate your return on assets ratio in your
company's last and latest balance sheets and latest
income statement. You'll need to average the total
assets entries from your last and current balance
statement.
- Fill in your company's net income.
- Fill in your company's average total assets.
- Press "calculate."
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A return on assets ratio of 0.06:1
would mean the company is pulling in six cents
for each dollar of assets.
Like most business ratios, you can
learn the most from this one when you compare
it to your ROA ratios from previous years and
with the industry norms
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