Return on Assets (ROA) is a financial metric that measures 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 indicates 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, providing insights into operational efficiency and overall profitability. A consistent or improving ROA can signal a healthy business.