The return on assets is a profitability ratio that measures the:
A)profit that the entity has generated specifically for its owners
B)ability of an entity to generate income from its asset investments
C)the relative amount of cash flow generated by each sales revenue dollar
D)none of the options is correct

Question

Quizplus · Accepted Answer

The return on assets ratio measures how efficiently a company is utilizing its assets to generate profits. It is calculated by dividing net income by total assets. Therefore, it indicates the ability of an entity to generate income from its asset investments.

The Return on Assets Is a Profitability Ratio That Measures