Return on assets (ROA) is used in fundamental analysis to determine the profitability of a company in relation to its total assets. To calculate a company's ROA, divide its net income by its total assets. The ROA formula can be calculated in Microsoft Excel to determine a company's efficiencies in generating earnings using its assets.
Explaining How to Calculate the ROA Ratio in Excel
According to the income statement of Netflix Incorporated, as of March 31, 2015, Netflix Incorporated reported a net income of $23.696 million. Netflix Incorporated reported total assets of $9,240,626,000 for the quarter ending on March 31, 2015.
Assume you want to calculate the return on assets ratio of Netflix Incorporated. First, right-click on columns A and B, and left-click on Column Width to change the value to 28 for each of the columns. Then, click OK. Enter Netflix Incorporated in cell B1.
Next, enter March 31, 2015, into cell B2. Enter Net Income into cell A3, Total Assets into cell A4 and Return on Assets into cell A5. Then, enter =23696000 into cell B3 and =9240626000 into cell B4.
To calculate the ROA of Netflix Incorporated, enter the formula =B3/B4 into cell B5. Therefore, the resulting return on assets of Netflix is 0.0026 or 0.26%.
This figure can be compared to a competitor of Netflix Incorporated, such as Amazon.com Incorporated. For the quarter ending on March 31, 2015, Amazon.com Incorporated had a net income of -$57 million and total assets of $50.075 billion.
Right click on column C and left click on Column Width and change the value to 28. Then, click OK and enter Amazon.com Incorporated into cell C1. Next, enter March, 31, 2015, into cell C2. Enter =-57000000 into cell C3 and =50075000000 into cell C4. Enter = C3/C4 into cell C5. Amazon.com Incorporated has a return on assets of -0.0011 or -0.11%.
Based on the ROA for the quarter ending on March 31, 2015, Netflix Incorporated is better at converting its assets into profits.