Question

The numerator of the return on total assets is: a.net income. b.net income minus preferred dividends. c.net income plus tax expense. d.net income plus interest expense.

Answer 1

Answer:

a)Net Income

Explanation:

The return on assets (ROA) is a balance sheet index that measures the profitability relating to the capital invested or the activity carried out (similar to ROI but for characteristic and asset management).

It is calculated as the ratio between current profit before financial charges (also known as EBIT) and total assets.

ROA= NET INCOME/AVERAGE TOTAL ASSETS

This number suggests how a company can act on what it owns, regardless of the form of financing put in place. It is very useful for comparing competing companies that are part of the same sector of the market. The value expressed by this index varies greatly from types to types of companies and company chains.As you see :

The Numerator: Net Income

The Denominator : Average Total Assets