ROA stands for return on investment. It is a way to measure a company’s assets as a ratio of its profit less its depreciation for the average capital used in a project or for the organization as a whole. The ROA formula is used often by investors to tell whether a company is using its resources effectively or not.
In terms of ROA or return on assets, this is a ratio that many investors find to be useful. The ratio measure how well a company is managing its assets to turn profits, during a certain time period. Investors can use the ROA to determine how well the company turns its investments into assets to provide profits.