Business and Personal Finance Dictionary

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• RETURN ON ASSETS (ROA)
  
  A percentage calculated by dividing net income after tax by total assets. Annual income is usually used in the numerator; however, the annualized income for a month, quarter, or half year can be used. Period-end assets is often used in this calculation; however, average assets for the period is more accurate. This ratio is a measurement of how profitably assets are used in an enterprise. Firms in different industries usually have quite different returns on assets. This ratio is best used to compare firms in the same industry.
  
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