The return on assets ratio is affected by both the net profit margin ratio and the asset turnover ratio.

Question

Quizplus · Accepted Answer

The return on assets ratio is calculated by dividing net income by total assets. The net profit margin ratio measures the profitability of a company by indicating the amount of net income generated by each dollar of sales. The asset turnover ratio measures the efficiency of a company in using its assets to generate revenue. Therefore, the return on assets ratio is affected by both the net profit margin ratio and the asset turnover ratio.

The Return on Assets Ratio Is Affected by Both the Net