Return on assets is always a larger number than the return on equity.

Name: Return on assets is always a larger number than the return on equity.
Brand: Quizplus
Rating: 4.8 (30 reviews)

Question

Quizplus · Accepted Answer

Return on equity (ROE) is calculated as net income divided by shareholder's equity, while return on assets (ROA) is calculated as net income divided by total assets. As total assets always includes shareholder's equity, ROA will always be smaller than ROE.

Return on Assets Is Always a Larger Number Than the Return