Which of the following is NOT correct regarding the rate of return on assets?
A) The rate of return on assets measures management's ability to productively employ all its resources.
B) The rate of return on assets measures the return on all assets used regardless of how the assets are financed.
C) The rate of return on assets is a measure of profitability.
D) The rate of return on assets measures the return on the investment made by the owners of the entity.

Question

Quizplus · Accepted Answer

The rate of return on assets measures the return on all assets used regardless of how the assets are financed. It is a measure of profitability and management's ability to productively employ all its resources. However, it does not measure the return on the investment made by the owners of the entity. This is measured by the return on equity.

Which of the Following Is NOT Correct Regarding the Rate