ROA (Return on Assets)

ROA (Return on Assets) measures how efficiently a company uses its assets to generate profit. It's calculated by dividing net income (what the company earned) by total assets (everything it owns). You'll see this metric when comparing companies in the same industry—it tells you which one squeezes more profit from its resources. A higher ROA generally means management is doing a better job. For example, if Company A generates $5 million in profit from $100 million in assets (5% ROA) while Company B generates $5 million from $50 million in assets (10% ROA), Company B is more efficient. Think of it like asking: "How much bang for the buck does this company get from what it owns?"