The return on assets ratio is affected by both the net profit margin ratio and the total asset turnover ratio.

Question

Quizplus · Accepted Answer

The return on assets (ROA) ratio is calculated by dividing net income by total assets. Net profit margin ratio is the percentage of revenue that remains as profit after deducting all expenses, taxes, and interest. Total asset turnover ratio is the ratio of net revenue to total assets. Therefore, both net profit margin ratio and total asset turnover ratio affect the ROA ratio.

The Return on Assets Ratio Is Affected by Both the Net