Return on assets can be calculated as:
A) return on equity plus the equity multiplier.
B) net interest income divided by earning assets.
C) asset utilization minus the expense ratio and the tax ratio.
D) interest income minus interest expense.
E) earning assets divided by average total assets.

Question

Quizplus · Accepted Answer

Return on assets (ROA) is calculated as net income divided by total assets, which can be expressed as asset utilization (revenue divided by assets) minus the expense ratio (expenses divided by assets) and the tax ratio (taxes divided by assets).

Return on Assets Can Be Calculated As