Since the ROA measures the firm's effective utilization of assets (without considering how these assets are financed), two firms with the same EBIT must have the same ROA.

Question

Quizplus · Accepted Answer

Two firms with the same EBIT can have different levels of assets. Therefore, even if they have the same EBIT, their ROAs could be different depending on how effectively they are utilizing their assets.

Since the ROA Measures the Firm's Effective Utilization of Assets