Asked by Tasia Williams on Jun 04, 2024
Verified
Net income divided by average total assets is:
A) Profit margin.
B) Total asset turnover.
C) Return on total assets.
D) Days' income in assets.
E) Current ratio.
Return on Total Assets
A financial ratio that measures a company's ability to generate earnings from its assets, indicating the effectiveness of asset use.
Net Income
Net Income is the total earnings of a company after subtracting all expenses, including taxes and costs, from its total revenue, reflecting the company's profitability.
Average Total Assets
An indicator of a company's operational efficiency, calculated as the average of the total assets over a specific period.
- Facilitate the computation and clarification of dividend yield, profit margin, total asset turnover, and return on total assets.
Verified Answer
MN
Monica NuñezJun 10, 2024
Final Answer :
C
Explanation :
Net income divided by average total assets is the formula for return on total assets (ROTA), which measures the company's efficiency in using its assets to generate profits. Therefore, the correct answer is C.
Learning Objectives
- Facilitate the computation and clarification of dividend yield, profit margin, total asset turnover, and return on total assets.