Which measure would be most useful in comparing the operating profitability of two firms in different industries?
A)Net profit margin
B)Return on equity
C)Sales to total assets
D)Return on assets

Question

Quizplus · Accepted Answer

Return on assets (ROA) is the most useful measure for comparing the operating profitability of two firms in different industries because it shows how efficiently a company can convert the money used to purchase assets into net income or profits. Unlike other measures, ROA takes into account the assets involved in generating earnings, making it a more comprehensive indicator of operational efficiency across different industry contexts.

Which Measure Would Be Most Useful in Comparing the Operating