Business changes resulting in higher net profit always increases ROA.

Question

Quizplus · Accepted Answer

While higher net profit can contribute to an increase in ROA, it is not the only factor. ROA (return on assets) takes into account both net profit and the assets employed to earn that profit. Therefore, changes that increase net profit must also be accompanied by either a decrease in assets or an increase in revenue generated per asset in order for ROA to be positively affected.

Business Changes Resulting in Higher Net Profit Always Increases ROA