Which of the following statements is true?
A)ROA is always greater than or equal to ROE
B)an increase in the asset turnover ratio implies a decrease in the asset intensity ratio
C)ROE measures the return on the enterprise
D)ROA measures the return on fixed assets

Question

Quizplus · Accepted Answer

B is correct because the asset turnover ratio is the inverse of the asset intensity ratio. An increase in the asset turnover ratio, which indicates how efficiently a company uses its assets to generate sales, implies a decrease in the asset intensity ratio, which measures the amount of assets needed to generate a dollar of sales.

Which of the Following Statements Is True