A commonly used ratio to judge the amount a company is earning, not just for its owners, but related to all the resources that managers have to use in the business, is
A) Net income
B) Return on assets
C) Return on common equity
D) Earnings per share

Question

Quizplus · Accepted Answer

Return on assets (ROA) measures how effectively a company is using its assets to generate profits. It is calculated by dividing net income by total assets. This ratio is useful because it takes into account both the profitability and the efficiency of the company in using its assets. Net income (A), earnings per share (D) and return on common equity (C) are also important measures of company performance but do not provide as comprehensive an evaluation of the company's use of its resources.

A Commonly Used Ratio to Judge the Amount a Company