Published: 23 January 2024
Return on assets (ROA) outperformance is the key to delivering superior value in a high-interest-rate economy. This research uses industry-specific benchmark data from the S&P Global 1200 to teach CFOs how to set an aspirational target as a critical first step toward ROA outperformance.
In a high-cost, tepid-growth, high-interest-rate economy, return on assets (ROA) outperformance is essential to driving cash flow and shareholder returns, significantly more so than operating margin or revenue growth. However, the ROA of most organizations is currently in decline, down 4% since 2014.
Median ROA ranges from as low as 3% in fixed-asset-intensive sectors, such as utilities and real estate, to as high as 10% in asset-lite sectors, like information technology.
Companies that set an aspirational target for enterprise ROA are significantly more likely to achieve above-sector-median ROA levels.
Industry-leading organizations increased their three-year average ROA by 20% to 50% between
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