Return on Assets

Return on assets measures the percentage of return on total assets (i.e. liabilities + equity). In Katelynn's Report, it is calculated as Trailing 12 months Net Income/Total Assets. Return on assets generally reflects the efficiency of the management team in using assets to generate profit. Different from return on equity, return on assets generally can be used alone to determine the performance of a business (i.e. the higher the better). Return on assets has industry and sector specific distribution. So it is more appropriate to compare within the same industry, or sector. For comparing companies from different industries/sectors, it is better to compare their performances relative to corresponding industry/sector peers.

The figures below show the distributions of return on assets on the whole market (left) and in technology sector (right) as of 2017-01-20 (solid blue), compared with one year ago (dashed pink). The colored vertical lines marked the location of AAPL (Apple Inc.) and GOOG (Alphabet Inc.)

At the whole market level, majority of companies have return on assets less than 10%. The performance of technology sector is generally above market average. GOOG and AAPL have outstanding performance in both scenarios.