Return on Assets (ROA) is a financial metric that indicates how effectively a company utilizes its assets to generate profit, calculated by dividing net income by total assets. A higher ROA suggests that the company is more efficient at converting its investments into earnings. Understanding ROA helps in assessing the interrelationships between a company's income statement and balance sheet, as it reflects both profitability and asset management, which are critical components for analyzing a company's overall financial health.
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