Cash Return on Assets (CRoA)
Calculate the cash return on assets (Cash ROA), a profitability ratio that measures how efficiently a company uses its assets to generate operating cash flow.
Unlike the return on assets, which uses accrual-based net income, the cash return on assets uses operating cash flow, making it less sensitive to non-cash accounting choices (e.g. depreciation method, revenue recognition timing, working capital accruals). Comparing cash ROA to ROA is a useful earnings-quality cross-check: a cash ROA that persistently trails ROA can indicate that reported profits are not being converted into cash.
The formula is as follows:
\[\text{Cash Return on Assets} = \text{Cash Flow from Operations} / \text{Average Total Assets}\]Also known as: cash ROA.
Cash Return on Assets (CRoA) in Python
get_cash_return_on_assets is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_cash_return_on_assets as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
cash_roa_ratios = toolkit.ratios.get_cash_return_on_assets()
Parameters
get_cash_return_on_assets accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.