Return on assets is a better measure of profitability than profit margin because it takes into account the assets invested in the business.

Question

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Return on assets (ROA) is a measure of how efficiently a company uses its assets to generate profit. It takes into account the amount of assets a company has invested in the business, and relates it to the profit generated. On the other hand, profit margin simply measures the percentage of profit earned on each dollar of revenue generated, without considering the amount of assets used to generate that revenue. Therefore, ROA provides a more comprehensive measure of profitability as it considers the efficiency of asset utilization in generating profit.

Return on Assets Is a Better Measure of Profitability Than