The return on assets ratio
A)considers the investments made by all creditors and stockholders of the company.
B)reflects investments made only by creditors of the company.
C)is based on average stockholders' equity as compared to net income for the period.
D)is a measure of the company's liquidity.

Question

Quizplus · Accepted Answer

The return on assets (ROA) ratio considers the investments made by all creditors and stockholders of the company because it measures how efficiently a company can manage its assets to produce profits during a period. It is calculated by dividing net income by total assets, where total assets include both debts (creditors) and equity (stockholders).

The Return on Assets Ratio