10th May 2010 by Gary B
ROA refers to return on assets, or is more commonly known as return on investment, or ROI.
You figure out what the return on assets is by adding the earnings plus how much it costs for interest, and divide it by the total assets of a company.
The bottom line is to be sure the return received is higher than what it costs to borrow money, or the interest rate. If it's higher, usually a company will decide to go forward with a specific project.
As to what the best rate should be, it differs too much from industry to industry to make a general assessment, but most will proceed with a project when it shows there will be a positive return.
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