A company may maintain its ROA if the net income margin decreases by increasing its asset turnover.

Question

Quizplus · Accepted Answer

ROA (return on assets) is calculated by dividing net income by total assets. Therefore, a company can maintain its ROA if, instead of increasing net income margin, it increases its asset turnover ratio. This means the company generates more revenue from the same level of assets, resulting in a higher ROA.

A Company May Maintain Its ROA If the Net Income