The return on assets should be calculated prior to any payments or returns to the debtholders or shareholders.

Question

Quizplus · Accepted Answer

The return on assets (ROA) measures a company's profitability by comparing its net income to its total assets. It is calculated by dividing the net income by the average total assets. It is important to calculate the ROA before any payments or returns to debtholders or shareholders are made because it gives a clear picture of how efficiently a company is using its assets to generate profits. Once a company's profitability has been determined, it can then decide how to allocate its earnings to debtholders and shareholders.

The Return on Assets Should Be Calculated Prior to Any