Return on Assets (ROA) is a financial ration that can show you how efficiently a company is using its assets to generate a profit. It isa measure of profitability relative to a company's assets. It is calculated by taking the net income and dividing it by total assets. It is good practice when performing due diligence on a stock or investment to compare the ROA of different companies in the same sector and similar in size and maturity. If ROA rises over time, it suggests that management is doing a good job generating profits from each dollar it owns in assets. A declining ROA means management is making some bad investments in assets that are not squeezing the desired margins they had hoped for.
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***I am not a financial advisor; this video is meant to be used for entertainment purposes only and represents only my personal opinions***
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#ROA #Stocks #Investing
0:00 Intro
0:20 ROA
1:25 Calculating ROA
5:50 Interpretation
