Definition of Return On Assets
Return on assets is a profitability measure that assesses how well the company is utilizing its assets to generate returns. This is also called as ROA and it is calculated as follows.
The higher the return on assets means that the better the management is operating the company’s assets. ROA is also used to calculate another important ratio called total assets to turn over by simply dividing the ROA with net margin.
Total Assets Turnover = ROA / Net Margin
Total Assets Turnover = [(Net Income / Total Assets)]/[(Net Income/ Sales)]
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