The return on assets ratio is the product of which of the following?
A)Asset turnover times gross margin percentage
B)Asset turnover times profit margin
C)Profit margin times sales
D)Profit margin times total assets

Question

Quizplus · Accepted Answer

The return on assets ratio is calculated by dividing the net income by the total assets. This is equivalent to multiplying the asset turnover ratio (sales divided by total assets) by the profit margin (net income divided by sales). Therefore, choice B, which multiplies the asset turnover ratio by the profit margin, is the correct choice. The other options do not result in the calculation of the return on assets ratio.

The Return on Assets Ratio Is the Product of Which