Operating ROA can be found as the product of ________.
A) return on sales × ATO
B) tax burden × interest burden
C) interest burden × leverage ratio
D) ROE × dividend payout ratio

Question

Quizplus · Accepted Answer

Operating ROA is calculated as the product of return on sales (ROS) and asset turnover ratio (ATO). ROS measures the profitability of sales, while ATO measures how efficiently a company is using its assets to generate revenue. Therefore, multiplying these two ratios gives the operating ROA, which shows how much operating profit a company is earning per dollar of assets.

Operating ROA Can Be Found as the Product of ________