Return on Tangible Assets (RoTA)
Calculate the return on tangible assets, a financial ratio that measures the amount of profit generated by a company’s tangible assets.
The return on tangible assets (ROTA) provides insights into the efficiency with which a company utilizes its tangible assets to generate profits. It is calculated by dividing net income by the average tangible assets: total assets minus goodwill and other intangible assets. Liabilities are not deducted, so the ratio is the return on the whole tangible asset base however it is financed, like the return on assets but without the acquired goodwill and intangibles that inflate the asset base of acquisitive companies. A ROTA well above the ROA therefore points to a large share of goodwill and intangible assets on the balance sheet.
The formula is as follows:
\[\text{Return on Tangible Assets} = \text{Net Income} / (\text{Average Total Assets} - \text{Average Goodwill and Intangible Assets})\]Also known as: ROTA, tangible asset return.
Return on Tangible Assets (RoTA) in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_return_on_tangible_assets as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["NUE", "STLD", "RS"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_return_on_tangible_assets()
Or, after setting up the Finance Toolkit MCP, ask:
What return on tangible assets did Nucor, Steel Dynamics and Reliance earn from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| NUE | 0.3474 | 0.3215 | 0.1685 | 0.074 | 0.0641 |
| RS | 0.2441 | 0.2715 | 0.1831 | 0.1229 | 0.1049 |
| STLD | 0.3172 | 0.3069 | 0.1778 | 0.1082 | 0.0795 |
Parameters
get_return_on_tangible_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 |