Welcome to our lesson on ROA, or Return on Assets. ROA is a financial ratio that measures how efficiently a company uses its assets to generate profit. Your formula shows ROA as Revenue minus Expenses, divided by Assets. Let's break down each component.
Now let's explore Revenue, represented by R. Revenue is the total income a company generates from selling its products or services. The formula is R equals P times Q, where P is the price per unit and Q is the quantity sold. For example, if a company sells 1,000 units at 10 dollars each, the revenue would be 10,000 dollars.