Return on Assets is a valuable financial measurement because it indicates how profit margin, asset turnover, and the equity multiplier affect a companies return. True or False?

True

Explanation:

Return on assets (ROA) is she valuable measure in assessing the effectiveness of company management in utilizing company capital. It is calculated

ROA=

Total Assets/

Net Income

where:

Total Assets=Shareholder Equity+Liabilities

Return on assets is closely related to return on equity as they are both almost used for same purpose which is measuring management's effectiveness in capital utilization. Return on equity differs from return on assets by the inclusion or exclusion of the debt factor in calculating them.

The relationship between ROA and ROE is demonstrated in DuPont formula which is given

ROE=profit margin*asset turnover*shareholder equity

answer; ///i believe that the correct answer is (post conventional)