ROAM (return on assets managed) equals:
A) Inventory turnover times the net profit
B) Accounts receivable plus inventories plus fixed assets divided by the contribution margin
C) Contribution as a percentage of sales times the asset turnover rate
D) The liquidity ratio divided by the turnover ratio
E) Number of salespeople divided by the number of sales each made

Question

Quizplus · Accepted Answer

ROAM (return on assets managed) is a financial ratio used to measure how efficiently a company is using its assets to generate profits. The formula for ROAM is the contribution as a percentage of sales multiplied by the asset turnover rate. This formula takes into account both profitability (contribution as a percentage of sales) and efficiency (asset turnover rate) to provide a comprehensive measure of a company's return on its assets. Option C is the only choice that includes both of these factors in its formula.

ROAM (Return on Assets Managed) Equals