Return on Assets formula
\[ \dfrac{\text{Net profit}}{\text{Average total assets}} \]
Terms
- Net profit, period total: The period’s result after all income, expenses and taxes.
- Total assets, average of opening and closing: Everything the company owns or controls: non-current plus current assets.
Result
Return on Assets is a percentage. Higher is better.
Target
There is no general target; compare with the company’s own history and with peers in the same industry.
Return on Assets pitfalls
- For a period shorter than a year, annualise it before comparing with annual benchmarks: three months of profit against average assets is roughly a quarter of the annual figure.
- Net profit is after interest, so ROA mixes operating performance with how the assets are financed. Basic earning power and ROCE remove that effect.
Return on Assets in Business Central
Net profit (period total)
- Every income statement account
133 posting accounts in total.
The full account list is on the Net profit page.
Total assets (average of opening and closing)
- Category Assets (1) and every category below it
- Plus 1 account assigned directly: 17120 Decreases during the Year
55 posting accounts in total.
The full account list is on the Total assets page.
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