Find out how efficiently a business turns its assets into profit. Enter net income and total assets at the start and end of the period for ROA on average assets. Add operating income, interest and tax rate for operating ROA and interest-adjusted ROA, and revenue for the margin × turnover split.
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Same period as net income.
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Same period as net income.
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Enter your values to see the result.
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How to use the Return on Assets Calculator
Enter net income and choose whether it covers a year, a quarter or a month.
Enter total assets at the beginning and end of the period.
Optionally add operating income, interest expense and your tax rate, and revenue.
Read ROA, average assets and the operating and adjusted versions.
Return on assets formulas
ROA = Net income ÷ Average total assets × 100
Average total assets = (Beginning assets + Ending assets) ÷ 2
Operating ROA = Operating income (EBIT) ÷ Average total assets × 100
Adjusted ROA = (Net income + Interest × (1 − Tax rate)) ÷ Average total assets × 100
ROA = Net profit margin × Asset turnover
Example: net income of $120,000 with total assets of $1,800,000 at the start of the year and $2,000,000 at the end (average $1,900,000) gives ROA = 120,000 ÷ 1,900,000 = 6.32%. With operating income of $210,000 the operating ROA is 11.05%; adding back $30,000 of interest after a 21% tax rate gives an adjusted ROA of $143,700 ÷ $1,900,000 = 7.56%.
ROA, ROE and ROI compared
Ratio
Formula
Answers the question
Return on assets (ROA)
Net income ÷ average assets
How much profit do all the company's assets generate?
Return on equity (ROE)
Net income ÷ average equity
How much profit is earned on the owners' money?
Operating ROA
EBIT ÷ average assets
How productive are the assets before financing and tax?
Return on investment (ROI)
Gain ÷ cost of investment
Did a specific investment or project pay off?
Because ROA depends heavily on how asset-intensive an industry is, compare it with the company's own history and with direct competitors rather than across sectors.
Frequently asked questions
What is the return on assets formula?
ROA = net income ÷ average total assets × 100, where average total assets = (beginning assets + ending assets) ÷ 2. Using the average matches a full period of income with the assets that were in place during that period.
What is operating ROA?
Operating ROA = operating income (EBIT) ÷ average total assets. Because it uses profit before interest and taxes, it compares how productively assets are used regardless of how the company is financed or taxed.
What is adjusted ROA?
Adjusted ROA adds back after-tax interest: (net income + interest expense × (1 − tax rate)) ÷ average assets. It shows the return generated for all capital providers, both lenders and shareholders, and is useful when comparing companies with very different debt levels.
What is a good ROA?
ROA varies widely by industry. Asset-heavy businesses such as utilities, manufacturers and banks have low ROAs, while software and service firms with few physical assets often have much higher ones. Compare a company with its own history and with close peers.
How do ROA and ROE relate?
ROE = ROA × equity multiplier (average assets ÷ average equity). If a company has no debt, ROA and ROE are equal; borrowing raises ROE above ROA when the business earns more on its assets than its debt costs.
How can ROA be broken down?
ROA = net profit margin × asset turnover, i.e. (net income ÷ revenue) × (revenue ÷ average assets). A company can reach the same ROA with high margins and slow turnover or thin margins and fast turnover.
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