Return On Average Assets - ROAA

Loading the player...

What is 'Return On Average Assets - ROAA'

Return on average assets (ROAA) is 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.

BREAKING DOWN '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.

RELATED TERMS
  1. Asset Performance

    A business's ability to take productive resources and manage ...
  2. Return on Average Capital Employed ...

    A financial ratio that shows profitability compared to investments ...
  3. Other Current Assets - OCA

    A firm's assets that do not include cash, securities, receivables, ...
  4. Safe Asset

    Assets which, in and of themselves, do not carry a high likelihood ...
  5. Average Price

    1. A representative measure of a range of prices that is calculated ...
  6. Historic Pricing

    A method for calculating the value of an asset using the last ...
Related Articles
  1. Fundamental Analysis

    Calculating Return on Net Assets

    Return on net assets measures a company’s financial performance.
  2. Active Trading

    Moving Averages: What Are They?

    By Casey Murphy, Senior Analyst ChartAdvisor.com Among the most popular technical indicators, moving averages are used to gauge the direction of the current trend. Every type of moving average ...
  3. Trading Strategies

    Technical Analysis: Moving Averages

    By Cory Janssen, Chad Langager and Casey MurphyMost chart patterns show a lot of variation in price movement. This can make it difficult for traders to get an idea of a security's overall trend. ...
  4. Technical Indicators

    Key Financial Ratios to Analyze Investment Banks

    Find out which financial ratios are most useful when analyzing an investment bank, and why tracking capital efficiency is especially important.
  5. Fundamental Analysis

    How To Calculate Your Investment Return

    How much are your investments actually returning? Find out why the method of calculation matters.
  6. Investing Basics

    What's an Asset?

    An asset is a resource with economic value.
  7. Investing

    Calculating The Means

    Learn more about the different ways you can calculate your portfolio's average return.
  8. Investing

    Asset Turnover Ratio

    Investopedia explains: The asset turnover ratio is a measure of a company's ability to use its assets to generate sales or revenue, and is a calculation of the amount of sales or revenue generated ...
  9. Investing Basics

    Explaining Financial Assets

    A financial asset is intangible property that represents a claim on ownership of an entity or contractual rights to future payments.
  10. Technical Indicators

    How To Use A Moving Average To Buy Stocks

    The Moving Average indicator is one of the most useful tools to trade and analyze financial markets.
RELATED FAQS
  1. Are stocks real assets?

    Learn why stocks are classified as financial assets, not real assets. Understand the properties that determine whether an ... Read Answer >>
  2. What is the fixed asset turnover ratio and why is it important?

    Learn about the fixed asset turnover ratio and how this calculation is used to analyze how efficiently a company uses its ... Read Answer >>
  3. How are moving averages used in trading?

    Moving averages are very popular tools used by technical traders to measure momentum. The main purpose of these averages ... Read Answer >>
  4. What are the advantages and disadvantages of using the total debt to total assets ...

    Learn how the total debt to total assets ratio is beneficial to investors and lenders in assessing the solvency of a company ... Read Answer >>
  5. Should I expect growth or income from buying stock in the consumer packaged goods ...

    Find out how annual returns are expressed in financial statements. How do fundamental investors measure annual returns? What ... Read Answer >>
  6. How is a simple moving average calculated?

    Learn about the simple moving average, how the indicators are used, and how to calculate a stock's simple moving average ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center