How to calculate Return on Assets (ROA)

Formula

ROA = net income ÷ average total assets

SQL query

This example assumes: annual_financials(year int, net_income numeric, total_assets numeric). It is written in PostgreSQL syntax; date functions differ slightly in MySQL, BigQuery and SQLite, and your column names will differ from these.

SELECT year,
       net_income,
       net_income / NULLIF((total_assets + LAG(total_assets) OVER (ORDER BY year)) / 2, 0) AS roa
FROM annual_financials
ORDER BY year;

Common mistakes that make Return on Assets (ROA) wrong

• Asset-heavy and asset-light businesses have structurally different ROA; compare within an industry.
• The first year has no prior balance, so the average is null; do not substitute zero.
• Some analysts add back after-tax interest to net income; state which version you use.

Ask for Return on Assets (ROA) in plain English

Instead of writing the query yourself, you can type the question. SchemaChat turns it into SQL against your connected database or uploaded file, runs it, and shows the SQL and the figures it used so you can check the answer before you share it. It does not replace your judgement about the definition: check that the query matches the formula your business uses.

• What was return on assets for each of the last 5 years?
• How did total assets grow compared with net income?