Return on assets is equal to:
A)Profit margin plus asset turnover.
B)Profit margin minus asset turnover.
C)Profit margin times asset turnover.
D)Profit margin divided by asset turnover.

Question

Quizplus · Accepted Answer

Return on assets (ROA) is calculated by multiplying the profit margin by asset turnover. Profit margin is the ratio of net income to net sales and measures how much of each dollar of sales is left after accounting for expenses. Asset turnover, on the other hand, measures how efficiently a company uses its assets to generate sales. Multiplying these two ratios together gives us the ROA, which measures the overall efficiency of a company in generating profits from its assets.

Return on Assets Is Equal To