Question

Which industry has a higher ROA?

Sofware industries or banks (depository institutions)

Answer 1

Typically Software Insutries have a higher ROA compared to banks. This is because of the economies of scale that can be achived by the software companies. Take Microsoft for example, once the firm has the necessary assets to create an operating system, then it doesn't take much effort in terms of time and money to produce many such millions of copies. So, the ROA of software companies will be higher.

On the other hand, the banks make money through the spread. Charging more interest on the loans they provide and paying less for the depositors. This is not easily scalable as the software company. To make new loans, the banks must take new deposits. And, this has a limitation. So, the ROA of banks will be lower than that of software companies.