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 helps them assess which companies are managing their resources better. A consistent or improving ROA can signal a company's strong operational performance and effective asset management.