Return On Average Assets - ROAA

AAA

DEFINITION of 'Return On Average Assets - ROAA'

An indicator used to assess the profitability of a firm's assets. It is most often used by banks and other financial institutions as a means to gauge their performance. As return on average assets (ROAA) is calculated at period ends (quarters, years, etc.), it does not reflect all of the highs/lows but is merely an average of the period.

INVESTOPEDIA EXPLAINS 'Return On Average Assets - ROAA'

ROAA is calculated by taking net income and dividing by average total assets. The final ratio is expressed as a percentage of total average assets. This metric displays how efficiently a company is utilizing its assets and is also useful to aide comparison among peers in the same industry.

VIDEO

RELATED TERMS
  1. Profit

    A financial benefit that is realized when the amount of revenue ...
  2. Return On Assets - ROA

    An indicator of how profitable a company is relative to its total ...
  3. Financial Institution - FI

    An establishment that focuses on dealing with financial transactions, ...
  4. Commercial Bank

    A financial institution that provides services, such as accepting ...
  5. Asset

    1. A resource with economic value that an individual, corporation ...
  6. Working Capital

    This ratio indicates whether a company has enough short term ...
Related Articles
  1. Analyzing A Bank's Financial Statements
    Fundamental Analysis

    Analyzing A Bank's Financial Statements

  2. Becoming A Financial Analyst
    Professionals

    Becoming A Financial Analyst

  3. Get To Know The Major Central Banks
    Forex Education

    Get To Know The Major Central Banks

  4. The Myth Of Profit/Loss Ratios
    Forex Education

    The Myth Of Profit/Loss Ratios

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center