Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
50% - Moderately

Return on Assets

Synonyms:return on investment
Acronyms &
Filed Under: financial-banking, investments
Tags: accounting, business, finance, financial derivatives, management, stock market

Definition of return on assets (ROA)

return on assets (ROA)
1. A method used to determine the profitability of a company by comparing its net income to its total assets. Return on assets (ROA) indicates what revenues were generated from the amount of capital invested. The assets used in the calculation include both debt and equity. Sometimes also known as "return on investment."

Related Terms and Acronyms:

  • capital gain (CG)   The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary.
  • cost basis   The original price paid for an investment which is also known as the basis or tax basis. The cost basis includes any commissions or fees paid when the investment was purchased.
  • internal rate of return (IRR)   That rate at which the present worth of all present and future investment costs equals the present worth of all present and future investment benefits.
  • investment   Something you put your money into in order to make money.
  • investment banking (IBK)   Bank operations that manage a bank's funding position, as well as its holdings of Treasury bills, bonds and preferred and common stock.
  • ratio   Comparison of two figures used to evaluate business performance, such as debt/equity ratio and return on investment.
  • return   Any increase in value or in income you earn on purchase or investment.
  • return on equity (ROE)   A ratio that shows how profitable a company is when compared to shareholder equity.
  • return on investment (ROI)   The profit an investment generates, expressed as equity divided by cash flow.

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