Return on Assets (ROA) 

Return on Assets (ROA) measures a company's ability to generate profit relative to its total assets. It indicates how effectively a business uses its asset base to produce earnings and is particularly useful for comparing capital-intensive companies. 

Formula: 

ROA (%) = (Net Income / Total Assets) × 100    

A higher ROA implies better asset utilization and operational efficiency, while a lower ROA could suggest underutilized or poorly managed assets. Investors and analysts use ROA to assess management’s ability to convert investment in assets into net income.