What is a healthy return on assets?

What is a healthy return on assets?

ROAs over 5% are generally considered good and over 20% excellent. However, ROAs should always be compared amongst firms in the same sector. A software maker, for instance, will have far fewer assets on the balance sheet than a car maker.

What is a good return on assets for a bank?

Generally speaking, ROA values of more than 5% are considered to be pretty good. An ROA of 20% or more is great.

What is the average return on assets by industry?

Return On Assets Screening as of Q

Ranking	Return On Assets Ranking by Sector	Roa
1	Retail	15.94 %
2	Services	14.30 %
3	Capital Goods	11.11 %
4	Technology	8.52 %

What is considered a low ROA?

ROA shows how good how profitable a company's assets are. ... It reflects the capital intensity of the company. The number will be different for different industries. But normally the value of 5% is considered to be a decent value.

Is a higher ROE better?

The higher the ROE, the better. But a higher ROE does not necessarily mean better financial performance of the company. As shown above, in the DuPont formula, the higher ROE can be the result of high financial leverage, but too high financial leverage is dangerous for a company's solvency.

How do you analyze ROA?

The simplest way to determine ROA is to take net income reported for a period and divide that by total assets. To get total assets, calculate the average of the beginning and ending asset values for the same time period.

What if ROA is negative?

A low or even negative ROA suggests that the company can't use its assets effectively to generate income, thus it's not a favorable investment opportunity at the moment.

Is a high ROE good?

A rising ROE suggests that a company is increasing its profit generation without needing as much capital. It also indicates how well a company's management deploys shareholder capital. A higher ROE is usually better while a falling ROE may indicate a less efficient usage of equity capital.

What is the average ROE?

Historically, the average ROE has been around 10% to 12%, at least in the US and UK. For stable economics, ROEs more than 12-15% are considered desirable. But the ratio strongly depends on many factors such as industry, economic environment (inflation, macroeconomic risks, etc.). The higher the ROE, the better.

What are average assets?

What are average assets? A company's balance sheet will often report the average level or value of assets held over an accounting period, such as a quarter or fiscal year. It is often calculated as beginning assets less ending assets divided by two.