What ROA is considered good?
Depends on sector. For non-banks, ROA above 10% is considered good. For banks, ROA of 1.5-3% is already very good. The key is to compare with similar companies.
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2) Fundamental Analysis
While ROE measures how well a company uses its own equity, ROA measures how well a company uses ALL its assets — including those financed by debt. ROA gives a total efficiency picture, without leverage 'tricks'.
ROA (Return on Assets) = Net Income / Total Assets x 100%. An ROA of 10% means every $100 of company assets generates $10 in profit. The higher the ROA, the more efficiently the company uses its assets.
Imagine two shop owners. Shop A has Rp50 million in equipment and earns Rp10 million/year profit (ROA 20%). Shop B has Rp500 million in equipment but only earns Rp10 million/year too (ROA 2%). Shop A is far more efficient — generating the same profit with 10x fewer assets.
Asset-light companies like MNCN (media) typically have higher ROA than asset-heavy companies like INDF (food manufacturing). Banks usually have low ROA (1-3%) because total assets are massive (including customer deposits), but this is normal for the industry.
After understanding this concept, apply it in tools so decisions become more objective and measurable.
Open Fair Value CalculatorWhat ROA is considered good?
Depends on sector. For non-banks, ROA above 10% is considered good. For banks, ROA of 1.5-3% is already very good. The key is to compare with similar companies.