Lingo every investor should know
Baseball players yearn for RBIs, or runs batted in. Investors can score by paying attention to ROA. Return on assets is a way of measuring how your company is doing.
Simply divide the company's net income by its total assets. The higher the ROA, the more profit the company generates per asset. That, in turn, indicates management efficiency.
ROA standards tend to vary by industry. So it's often useful to compare the ROA of several similar companies before making an investment decision about one.