Which of the following is the best indicator of management's effectiveness at generating profits relative to the firm's assets?
A) Quick ratio
B) Fixed assets turnover
C) Return on assets
D) Accounts receivable turnover

Question

Quizplus · Accepted Answer

Return on assets (ROA) measures the profitability of a company relative to its total assets. It indicates how effectively the company is using its assets to generate profits. A higher ROA indicates better management effectiveness at generating profits. Quick ratio (A) measures a company's liquidity position, fixed assets turnover (B) measures the efficiency of a company in utilizing its fixed assets to generate sales, and accounts receivable turnover (D) measures how efficiently a company is managing its receivables. However, none of them provide an indication of management's effectiveness at generating profits relative to the firm's assets.

Which of the Following Is the Best Indicator of Management's