Which of the following is the formula for computing the rate of return on total assets?
A)(Net income - preferred dividends)/number of shares of outstanding common stock
B)Net income/net sales
C)(Net income + interest expense)/average total assets
D)(Net income - preferred dividends)/average common stockholders' equity

Question

Quizplus · Accepted Answer

The formula for computing the rate of return on total assets (ROTA) is (Net income + interest expense)/average total assets. Option A is the formula for computing earnings per share. Option B is the formula for computing the profit margin. Option D is the formula for computing the return on equity (ROE).

Which of the Following Is the Formula for Computing the Rate