How to calculate return of asset?

hi binny
when i am looking forward to invest in asset and in order to check the return of asset on an average which average i should consider geometric mean or arithmetic mean?

2 Answer(s)


ROA is best metric to judge the return on asset year over year. most of the financial websites gives 3, 5 years arithmetic average of ROA.


I agree with Yasars answer. Arithmetic mean of 5 years is appropriate enough. Apart from the ROA you also need to think about the opportunity cost of the money - were else can you invest it in.