Charlie Plumbing Supplies has a return on assets (ROA) of 24%, while the industry average of similar companies is 13%. This means that Charlie Plumbing Supplies' asset turnover is higher than the industry average.

Question

Quizplus · Accepted Answer

This is not necessarily the case, since ROA is made up of two components, profit margin times asset turnover. Without any more information, we cannot determine if it is the asset turnover or the profit margin, or both, that is driving the higher ROA .

Charlie Plumbing Supplies Has a Return on Assets (ROA) of 24