Return on assets is:
A)Also called rate of return.
B)Computed by dividing net income by average total assets.
C)Computed by multiplying net income by average total assets.
D)Used in helping evaluate expenses.
E)Found on the balance sheet.

Question

Quizplus · Accepted Answer

Return on assets is computed by dividing net income by average total assets, which gives a ratio that measures how efficiently the company is utilizing its assets to generate profits. It is not the same as rate of return, which is a broader concept that can refer to various measures of investment profitability. Multiplying net income by average total assets does not give a meaningful metric, and return on assets is not directly used to evaluate expenses. Return on assets is typically found on the income statement, not the balance sheet.

Return on Assets Is