return on assets

How to Calculate ROA?

ROA is calculated using the following formula:
ROA = (Net Income / Total Assets) * 100
For example, if a company has a net income of $150,000 and total assets worth $1,000,000, the ROA would be:
ROA = ($150,000 / $1,000,000) * 100 = 15%
This means that for every dollar invested in assets, the company generates 15 cents in profit.

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