If a company's ratio of net income to net sales (generally referred to as profit margin on sales)is low, then its return on investment will be low.

Question

Quizplus · Accepted Answer

A company's return on investment (ROI) is not solely determined by its profit margin on sales. ROI also depends on factors such as asset turnover (how efficiently a company uses its assets to generate sales). A company could have a low profit margin but high asset turnover, leading to a high ROI.

If a Company's Ratio of Net Income to Net Sales