Jurisdiction(s):
United Kingdom

Key definition

Return on total assets definition

What does Return on total assets mean? In corporate, finance and M&A practice, return on total assets (ROA) describes how efficiently a company turns its asset base into profit. It is a descriptive accounting ratio rather than a term defined in legislation or case law, and its use is broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland. ROA is commonly calculated as profit before interest and tax (EBIT) ÷ total assets (usually the average of opening and closing assets), where total assets comprise fixed and current assets. Lawyers encounter ROA in due diligence, valuation commentary, board papers and, importantly, in loan agreements and bond...

In-house Lawyers’ Finance Toolkit: Questions to Assess Growth, Profitability, Liquidity, Working Capital, Risk Appetite and Financial Reporting in Your Organisation

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Precedents

This is designed to build your understanding of your organisation’s finance and accounting by providing essential financial questions. Capture every response in the table. You might also need to consult your finance team to fill any omissions along the way as you proceed...

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Web page updated on 22/05/2026

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