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  • Acumen Learning

What is ROA?


ROA, or Return on Assets, is a word you've probably heard before. Knowing and understanding it will be beneficial in your business conversations and help you progress in your career.

ROA is a very important measure that provides a ratio of net income divided by the total assets of a company. Why is this important? By having a ratio you can gain insight into what total assets were required to generate the profit at any company. In isolation, profit does not tell you what was required to generate that profit. For example, two companies can generate the same profit of $10 million. One company has $100 million dollars in assets and the other company has