Which statement below best describes the meaning of return on assets (ROA)?
A)It answers the question: "How much profit does the company have for each dollar of revenues?"
B)It is the percentage of profit earned from collecting accounts receivable.
C)It indicates how well management uses a company's assets to generate net income.
D)It measures the leverage during a period.

Question

Quizplus · Accepted Answer

Return on assets (ROA) indicates how effectively a company is using its assets to generate net income. It is calculated by dividing net income by total assets. ROA measures how efficient a company is at using its resources to generate profits. Choices A, B, and D are not accurate descriptions of ROA.

Which Statement Below Best Describes the Meaning of Return on Assets