Return on assets (ROA) is one of profitability indicators reveals how much profit will be generated by unit of assets. It expresses how effectively the company manages its assets.
* often average from the beginning and ending balance
The numerator is usually EAT (PAT) or EBIT.
The higher is the net margin and the higher asset turnover, the higher is ROA.
ROA is usually lower in companies with naturally high asset (e.g. utilities). Conversely, companies with low assets (e.g. services) tend to have higher ROA.
Comparisons:
Recommended value: Wikipedia states that ROA above 5% is considered good (12).