Return On Average Assets - ROAA

An indicator used to assess the profitability of a firm's assets. It is most often used by banks and other financial institutions as a means to gauge their performance. As return on average assets (ROAA) is calculated at period ends (quarters, years, etc.), it does not reflect all of the highs/lows but is merely an average of the period.

ROAA is calculated by taking net income and dividing by average total assets. The final ratio is expressed as a percentage of total average assets. This metric displays how efficiently a company is utilizing its assets and is also useful to aide comparison among peers in the same industry.