Which of the following is the formula for computing the rate of return on total assets?
A)(Net income + interest expense)/ average total assets
B)Net income / net sales
C)(Net income - preferred dividends)/ number of shares of outstanding common stock
D)(Net income - preferred dividends)/ average common stockholders' equity

Question

Quizplus · Accepted Answer

The formula for computing the rate of return on total assets is (Net income + interest expense)/ average total assets. This shows how efficient a company is in generating profits from its assets, including both investments in operations and financing. Option B is the formula for calculating the net profit margin, which is a measure of a company's profitability. Option C is the formula for computing earnings per share, while option D is the formula for calculating the return on equity, which measures the return generated for common shareholders.

Which of the Following Is the Formula for Computing the Rate