Return on Investment (ROI) - Definition & Calculation

Return on Investment (ROI): As the name suggests, Return on Investment means the monetary benefit earned on an investment. One may consider it as profits in percentage term on capital invested.

Formula: Net Income / Average owners equity or

                       Net Income / Invested capital

Return on Assets (ROA) - Definition & Calculation

Return on Assets (ROA): Return on Assets measures the amount of revenue generated by the company based on its investments in Assets. It may also be defined as the rate at which the assets of the company generate revenues for the company. This particular metric is very much popular in analysing the capital intensity of the company. Lower the ROA, higher the capital intensity.