The return on assets is calculated as:

Question

Quizplus · Accepted Answer

The return on assets (ROA) is a measure of how efficiently a company is using its assets to generate earnings. It is calculated by dividing net income by average total assets. This takes into account changes in assets throughout the year and provides a more accurate picture of the company's performance. Choice A is incorrect as it does not consider the changes in assets throughout the year. Choice C is incorrect as it only considers ending total assets, which may not represent the average level of assets for the year. Choice D is incorrect as it divides total assets by net income, which is not a relevant calculation for ROA.

The Return on Assets Is Calculated As