Return on Assets (RoA)
Calculate the return on assets (ROA), a profitability ratio that measures how efficiently a company uses its assets to generate profits.
The return on assets is calculated by dividing the net income by the average total assets. Note that it is false to take the total assets at the end of the period given that income statements report over the period whereas a balance sheet reports on the period.
The formula is as follows:
\[\text{Return on Assets} = \text{Net Income} / \text{Average Total Assets}\]Return on assets is the natural measure for banks and insurers, whose assets are mostly loans and investments, and where a return of about 1% is the usual benchmark for a bank. Outside finance it is best compared within an industry, since asset-light businesses such as software and services earn far higher returns on assets than utilities or manufacturers. Because net income is after interest, two companies with the same operations but different leverage show different returns on assets.
Also known as: ROA, asset profitability.
Return on Assets (RoA) in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_return_on_assets as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["BAC", "WFC", "C", "USB"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_return_on_assets()
Or, after setting up the Finance Toolkit MCP, ask:
What return on assets did Bank of America, Wells Fargo, Citigroup and U.S. Bancorp earn from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| BAC | 0.0102 | 0.0084 | 0.008 | 0.0079 | 0.0087 |
| C | 0.0091 | 0.0058 | 0.0033 | 0.0048 | 0.0052 |
| USB | 0.0135 | 0.0088 | 0.0075 | 0.0088 | 0.0105 |
| WFC | 0.0107 | 0.0066 | 0.0094 | 0.0096 | 0.0101 |
Parameters
get_return_on_assets accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows (per quarter and not annualized with quarterly data). | 4 |