Return on total assets is the product of
A) interest rates and pre-tax profits.
B) the debt-equity ratio and P/E ratio.
C) the after-tax profit margin and the asset turnover ratio.
D) sales and fixed assets.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

Return on total assets (ROTA) is calculated by multiplying the after-tax profit margin (net income divided by sales) with the asset turnover ratio (sales divided by total assets). This reflects how efficiently a company uses its assets to generate profit.

Return on Total Assets Is the Product of