Return on Assets (ROA) is a financial metric that indicates how efficiently a company uses its assets to generate profit. It is calculated by dividing the net income by the total assets. A higher ROA suggests that the company is more effective at converting its investments into earnings. Investors and analysts often use ROA to compare the performance of companies within the same industry. This ratio helps assess how well a company is managing its resources, making it a valuable tool for evaluating operational efficiency and overall financial health.