Which of the ratios listed helps to indicate the efficiency with which the resources of the company are being utilised to generate profit?
A) Current ratio
B) Profit margin
C) Quick ratio
D) Return on assets

Question

Quizplus · Accepted Answer

Return on assets (ROA) measures how effectively a company is using its assets to generate profit. It is calculated by dividing net income by total assets. A high ROA indicates that the company is generating a significant amount of profit relative to the amount of assets it has. Therefore, D is the correct answer. A, B, and C do not measure specifically the efficiency with which the company's resources are being utilized to generate profit.

Which of the Ratios Listed Helps to Indicate the Efficiency