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Return on Assets (ROA)
Valuation & Fundamentals
Net income divided by total assets.
It shows how efficiently the company uses everything it owns, whether financed by equity or by debt. It is naturally low for businesses with a very large asset base, such as banks, so comparisons should stay within the same sector.
Example
A company with net income of $2 billion and total assets of $40 billion has an ROA of 5%.
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