Return on assets is calculated as:

Question

Quizplus · Accepted Answer

Return on assets is calculated by dividing net income by average total assets. This formula provides a more accurate representation of a company's performance, as it takes into account any changes in assets over the course of a year. Using the ending total assets (option C) would not factor in any fluctuations in assets over the year and could potentially skew the calculation. Using only total assets (option A) would not take into account any changes in assets over the year and would not provide an accurate measurement of the company's performance.

Return on Assets Is Calculated As