All else the same, lower return on assets (ROA) ratio would likely be associated with a ﬁrm which
has a high capital intensity ratio, relative to other ﬁrms in the same industry.

Question

Quizplus · Accepted Answer

A high capital intensity ratio means that the firm has a higher investment in fixed assets, which can lower their return on assets (ROA) ratio as compared to firms with lower capital intensity ratios. Therefore, a lower ROA ratio is likely to be associated with a firm that has a high capital intensity ratio relative to other firms in the same industry.

All Else the Same, Lower Return on Assets (ROA) Ratio