# What is my ROA?

Computes return on assets (ROA): net income divided by average total assets, as a percent, with the profit margin and total asset turnover when net sales are given.

- Page: https://www.acalculator.org/finance/roa-calculator
- JSON spec: https://www.acalculator.org/finance/roa-calculator.json
- Version: e5d64dbd22b7

## Default answer

Example with the default inputs (Net income $35,000.00, Total assets at the start of the year $200,000.00, Total assets at the end of the year $250,000.00, Net sales $120,000.00): Net income of $35,000.00 on average total assets of $225,000.00 is a return on assets of 15.56%.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| ni | Net income | Net income for the year from the income statement. Negative for a net loss. |
| start | Total assets at the start of the year | Total assets on the balance sheet at the start of the year (last year’s ending balance). Optional. |
| end | Total assets at the end of the year | Total assets on the balance sheet at the end of the year. |
| sales | Net sales | Net sales (revenue) for the year, for the profit margin and asset turnover. Optional. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| roa | Return on assets (ROA) | Net income ÷ average total assets × 100. |
| average | Average total assets | (Start + end) ÷ 2, or the end balance alone when the start is empty. |
| margin | Profit margin | Net income ÷ net sales × 100. |
| turnover | Total asset turnover | Net sales ÷ average total assets. |

## Method

Average total assets = (total assets at the start + total assets at the end) ÷ 2. ROA = net income ÷ average total assets × 100. Profit margin = net income ÷ net sales × 100; total asset turnover = net sales ÷ average total assets.

## Assumptions

- Net income is for the same year as the two balance sheets.
- With no start-of-year total, the year-end total assets stand in for the average.
- Arithmetic is exact on the typed decimals; percents and the turnover show to 2 decimals and money to the cent, halves up.

## Worked examples

1. ni = $35,000.00, start = $200,000.00, end = $250,000.00, sales = $120,000.00 gives roa = 15.56%, average = $225,000.00, margin = 29.17%, turnover = 0.53. Source: OpenStax, Principles of Finance, 6.6 Profitability Ratios and the DuPont Method (return on total assets = net income ÷ average total assets; average total assets = (beginning + ending total assets) ÷ 2; Clear Lake Sporting Goods: net income $35,000, total assets $200,000 and $250,000, net sales $120,000, ROA 16%, profit margin 29%, total asset turnover 0.53). https://openstax.org/books/principles-finance/pages/6-6-profitability-ratios-and-the-dupont-method.
2. ni = $50,000.00, end = $400,000.00 gives roa = 12.5%, average = $400,000.00. Source: OpenStax, Principles of Finance, 6.6 Profitability Ratios and the DuPont Method (return on total assets = net income ÷ average total assets; average total assets = (beginning + ending total assets) ÷ 2; Clear Lake Sporting Goods: net income $35,000, total assets $200,000 and $250,000, net sales $120,000, ROA 16%, profit margin 29%, total asset turnover 0.53). https://openstax.org/books/principles-finance/pages/6-6-profitability-ratios-and-the-dupont-method.
3. ni = -$12,000.00, start = $150,000.00, end = $170,000.00 gives roa = −7.5%, average = $160,000.00. Source: OpenStax, Principles of Finance, 6.6 Profitability Ratios and the DuPont Method (return on total assets = net income ÷ average total assets; average total assets = (beginning + ending total assets) ÷ 2; Clear Lake Sporting Goods: net income $35,000, total assets $200,000 and $250,000, net sales $120,000, ROA 16%, profit margin 29%, total asset turnover 0.53). https://openstax.org/books/principles-finance/pages/6-6-profitability-ratios-and-the-dupont-method.
4. ni = $1,234.56, start = $10,000.10, end = $12,345.67, sales = $5,000.25 gives roa = 11.05%, average = $11,172.89, margin = 24.69%, turnover = 0.45. Source: OpenStax, Principles of Finance, 6.6 Profitability Ratios and the DuPont Method (return on total assets = net income ÷ average total assets; average total assets = (beginning + ending total assets) ÷ 2; Clear Lake Sporting Goods: net income $35,000, total assets $200,000 and $250,000, net sales $120,000, ROA 16%, profit margin 29%, total asset turnover 0.53). https://openstax.org/books/principles-finance/pages/6-6-profitability-ratios-and-the-dupont-method.

## FAQ

### What is return on assets?

Return on assets (ROA) is net income as a percent of the assets a company uses to earn it. It shows how much profit each dollar of assets produces: an ROA of 15% means 15 cents of net income a year for every dollar of assets.

### How do I calculate ROA?

Add total assets at the start and end of the year and divide by 2 for average total assets. Divide net income by that average and multiply by 100. Clear Lake Sporting Goods earned $35,000 on assets of $200,000 and $250,000: 35,000 ÷ 225,000 = 15.56%.

### Why use average total assets?

Net income is earned over the whole year, while a balance sheet shows one day. Averaging the start and end balances matches the assets to the year the income was earned. If you only have the year-end figure, leave the start empty and the calculator uses the end balance.

### What is a good ROA?

It depends on the industry. Businesses that need large plants or inventories, such as manufacturers and utilities, tend to have lower ROAs than service or software companies. Compare a company with its own past and with similar companies.

### How is ROA different from ROE?

ROA divides net income by all assets, however they are paid for. ROE divides it by shareholders’ equity alone, so a company that borrows more has a higher ROE for the same ROA. ROE = ROA × total assets ÷ equity.

### How do profit margin and asset turnover make up ROA?

ROA = profit margin × total asset turnover, the first two parts of the DuPont method. Clear Lake’s profit margin is 35,000 ÷ 120,000 = 29.17% and its asset turnover is 120,000 ÷ 225,000 = 0.5333; 29.17% × 0.5333 = 15.56%.

## Sources

- OpenStax, Principles of Finance, 6.6 Profitability Ratios and the DuPont Method: return on total assets = net income ÷ average total assets; average total assets = (beginning total assets + ending total assets) ÷ 2; profit margin = net income ÷ net sales; total asset turnover = net sales ÷ total assets; Clear Lake Sporting Goods (net income $35,000, total assets $200,000 and $250,000, net sales $120,000; ROA 0.16, profit margin 0.29, turnover 0.53, all rounded). https://openstax.org/books/principles-finance/pages/6-6-profitability-ratios-and-the-dupont-method (retrieved 2026-10-19)