Return on assets is computed as:
A) Net income / Average stockholders' equity
B) Net income / Average total assets
C) Return on sales × Asset turnover
D) B or C

Question

Quizplus · Accepted Answer

Return on assets (ROA) can be computed directly by dividing net income by average total assets (B), or indirectly by multiplying return on sales (net income divided by sales) by asset turnover (sales divided by average total assets), which is option (C). Therefore, both B and C are correct ways to compute ROA, making D the correct answer.

Return on Assets Is Computed As