Which one of the following methods of analysis is most similar to computing the return on assets (ROA)?
A)internal rate of return
B)profitability index
C)average accounting return
D)net present value
E)payback

Question

Quizplus · Accepted Answer

The return on assets (ROA) measures how efficiently a company is using its assets to generate profits. Similarly, the average accounting return measures the average profit earned as a percentage of the average book value of the investment. Therefore, the method of analysis most similar to computing the return on assets (ROA) is the average accounting return. The other options, such as internal rate of return, profitability index, net present value, and payback, are different methods of investment analysis that focus on different aspects of an investment's performance.

Which One of the Following Methods of Analysis Is Most