The return on assets ratio may be expressed as:
A)gross margin × total assets.
B)net income × profit margin ratio.
C)profit margin ratio × total asset turnover.
D)total asset turnover × gross margin ratio.

Question

Quizplus · Accepted Answer

The return on assets (ROA) ratio is calculated by dividing net income by total assets. To further break down this ratio, it can be expressed as the product of two other ratios: profit margin ratio (net income divided by net sales) and total asset turnover (net sales divided by total assets). Therefore, the ROA can be expressed as profit margin ratio × total asset turnover.

The Return on Assets Ratio May Be Expressed As