The return on assets is calculated as:

Question

Quizplus · Accepted Answer

Return on assets (ROA) is calculated by dividing net income by average total assets. This is the most accurate measure of a company's profitability based on its assets, as it takes into account changes in assets over time. Option A takes only the point-in-time snapshot of total assets, which may not reflect changes in assets. Option C takes only the ending snapshot of assets, which could also miss changes in assets. Option D is not a valid calculation for ROA.

The Return on Assets Is Calculated As