Also called the return on total assets ratio, it measures the efficiency of assets used to generate income by measuring the amount of profit generated for every $100 invested in assets. Basically, the return on investment (ROI) ratio indicates how well your management team is utilizing your company's resources (assets).
The number will vary widely across different industries. Capital‑intensive industries such as railways will yield a low ROI, since they need expensive infrastructure to do business. Service‑based operations such as consulting firms will have a high ROI, as they require minimal hard assets to operate.
How to calculate the return on investment:
Income from operations
Average total assets
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