Operating Return on Assets (ROA)
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A step-by-step guide covering Python, SQL, analytics, and finance applications.
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Operating Return on Assets (ROA) is one of the important profitability ratios. Operating ROA is calculated just like Return on Assets but uses Earnings Before Interest and Taxes (EBIT) instead on Net Income.
Operating return on assets indicates the company's operating income generated per dollar invested in total assets.
A higher operating RoA is preferred and while analyzing this ratio, the analyst must analyse the historical performance and also compare it with the peers in the industry.