Which of the Following Best Describes the Return on Assets

question 55

Multiple Choice

Which of the following best describes the return on assets ratio?

• A)Net income + interest expense) ÷ total assets
• B)[Net income + interest expense × 1 - tax rate))] ÷ average total assets
• C)[Net income + interest expense × tax rate)] ÷ average total assets
• D)Net income + interest expense + income tax expense) ÷ total assets

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Definitions:

Return On Equity

Return on Equity (ROE) measures a company's profitability by calculating how much profit a company generates with the money shareholders have invested.

Total Asset Turnover

A financial ratio that measures how efficiently a company uses its total assets to generate sales revenue.

Total Assets

The sum of all assets owned by an entity, including both current and non-current assets, reflecting the total resources at its disposal.

Fixed Asset Turnover

A financial ratio that measures a company's efficiency in using its fixed assets to generate sales.