The ﬁnancial ratio measured as net income divided by total assets is known as the ﬁrm's:
A) Proﬁt margin.
B) Return on assets.
C) Return on equity.
D) Asset turnover.
E) Earnings before interest and taxes (EBIT).

Question

Quizplus · Accepted Answer

The financial ratio of net income divided by total assets is known as return on assets (ROA). Proﬁt margin is the ratio of net income to sales, return on equity (ROE) is the ratio of net income to equity, asset turnover is the ratio of sales to total assets, and earnings before interest and taxes (EBIT) is a measure of operating income.

The ﬁNancial Ratio Measured as Net Income Divided by Total