If management wishes to measure how effectively the assets were used in generating a profit, they could use the:
A) rate of return on total assets.
B) rate of return on common stockholders' equity.
C) return on sales.
D) times interest earned.

Question

Quizplus · Accepted Answer

The rate of return on total assets measures how effectively a company uses its assets to generate profit, by comparing net income plus interest expense (to neutralize the effect of leverage) to the average total assets.

If Management Wishes to Measure How Effectively the Assets Were