Return on assets reflects the effectiveness of a company's ability to generate profit through productive use of its assets.

Question

Quizplus · Accepted Answer

Return on assets (ROA) is a financial ratio that measures a company's net income or profit generated as a percentage of its total assets. Therefore, it reflects how well a company is utilizing its assets to create profits or earnings. A high ROA indicates that a company is efficient in generating profits from its assets, while a low ROA suggests that a company is not efficiently using its assets to boost profits.

Return on Assets Reflects the Effectiveness of a Company's Ability