What does "return on assets" mean?
Our return on assets (ROA) calculator uses a business’ net profit to work out the return of a business in the form of a percentage. It is generally expressed a percentage of increase or decrease in the value of an asset which could be the business you intend to purchase. Return on assets is a basic but important analytical tool that is commonly used by business owners and investors.
How do you calculate return on assets?
If a business is selling price of $200,000 and the net profit was $50,000 for the past year.
Use this formula to work out return on assets:
ROA = (net annual profit / asset price) x 100
ROA = (50 000/200 000) x 100
In this case, your ROA is 25%.