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Glossary · PSX term

Return on assets (ROA).

ROA shows how much profit a company generates from its total assets.

Definition

Calculated as net profit divided by total assets, ROA reveals how efficiently a business uses everything it owns to make money. It is useful for comparing asset-heavy companies and complements ROE.

Worked example

A company earning Rs. 5 billion on Rs. 100 billion of assets has an ROA of 5%.

Related on PSX Clarity

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Return on equity
Term
Net margin
Term
Balance sheet

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