Glossary
Return on Assets (ROA)
Net income as a percentage of total assets.
ROA = Net Income / Average Total Assets × 100%. Unlike ROE, ROA isn't inflated by leverage — it shows how productively a firm uses everything on its balance sheet.
Banks and insurers run with low ROA (1–2%) because their balance sheets are largely funding-related; software firms can clear 20%+ because their assets are minimal.