Management Glossary

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return on assets

Abbreviated as ROA, it is an indicator of how productively a company uses its assets. ROA is calculated as the income for a 12-month period divided by the average value of the company's assets during that period. Because different industries require different assets and use them differently, ROA is not particularly worthwhile at comparing companies in different industries, but it can indicate how efficiently and effectively different companies within the same industry are putting their assets to work.

Contributed by: Managerwise Staff
See: asset

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