Business changes resulting in higher net profit always increases ROA.

Question

Quizplus · Accepted Answer

Business changes resulting in higher net profit may or may not increase ROA, as the ROA formula considers both net profit and total assets. If the increase in net profit is accompanied by a proportional increase in assets, then the ROA may remain the same. On the other hand, if the increase in net profit is achieved through a decrease in assets, then the ROA may increase. It depends on the specific circumstances of the business changes.

Business Changes Resulting in Higher Net Profit Always Increases ROA