Return on Assets

Takes the net profit (after taxes) from the profit and loss statement, and divides it into the total assets from the balance sheet. A firm with $25,000 in total assets and $3000 in net profits (after taxes) would have a return on assets (ROA) of $3000/$25000 or 12 percent. For each dollar of assets, the firm earns 12 cents in profit (after taxes). Return on Assets is one of the ratios used in the Dupont Model of financial performance.