ACCOUNTING GLOSSARY
ROA
Return on Assets
Net income divided by total assets.
What does ROA mean?
Net income divided by total assets. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
ROA in context
$300,000 income on $5 million assets equals 6% ROA.
Why it matters in financing
ROA can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related accounting terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.