How much profit the whole asset base earned
Return on assets is net income divided by total assets, as a percentage. It measures how efficiently everything the company uses — borrowed money included — turns into profit. Because it is less sensitive to leverage than ROE, it helps you tell whether a high ROE comes from the business or from borrowing.
Net income of $20 million on $500 million of assets is 4%. The same profit on $1 billion of assets is only 2%.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.