Question

Return on assets is computed as net income divided by total assets. true false question. true false

Answer 1

The statement, return on assets is computed as net income divided by total assets, is true.

Return on assets (ROA) is a profitability ratio, which measures that how efficiently a company uses the assets it owns to generate profits. If a company wants increase the return on assets then the company tries to increase the profit margin.

So the return on asset of a company is computed by dividing the net income earned by the company by average total assets employed by the company. Thus, it measures how much percentage of profit the company is generating in respect to its assets.

Hence, the higher the percentage of return on assets, the better it is.

To learn more about return on assets here:

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