The return on assets for a firm with a profit margin of 4.5%,compared to a firm with a profit margin of 3.5%,will:
A)always be higher
B)always be lower
C)always be the same
D)could be higher or lower

Question

Quizplus · Accepted Answer

The return on assets (ROA) depends on both the profit margin and the asset turnover. A firm with a higher profit margin could have a lower ROA if its asset turnover is significantly lower than that of a firm with a lower profit margin.

The Return on Assets for a Firm with a Profit