Describe the return on assets ratio and the DuPont approach for calculating return on assets.

The return on assets ratio is calculated by dividing net income by average total assets.The ratio measures the amount of income earned for every dollar invested in assets and is a measure of profitability and management effectiveness with respect to asset management.The DuPont formula states that the return on assets ratio has two component ratios,net profit margin and total asset turnover.The net profit margin ratio measures the net income generated per sales dollar and the total asset turnover ratio measures the net sales generated for average total assets.Return on assets equals net profit margin multiplied by total asset turnover.The DuPont formula implies that return on assets can be improved through both earnings and efficiency of asset use.