The denominator of the return on total assets ratio is the average total assets.

Average Total Assets

A financial metric calculated by averaging a company's total assets at the beginning and end of an accounting period, used to evaluate assets' efficiency.

Return Ratio

A financial metric indicating the profitability or effectiveness of an investment, often expressed as a percentage.

Denominator

The bottom number in a fraction that shows the total number of equal parts the whole is divided into.

Understand and correctly identify components and calculations involved in key financial ratios, including solvency, profitability, and liquidity ratios.

Verified Answer

Trisha PicanaMay 13, 2024

Final Answer :

True

Explanation :

The denominator of the return on total assets ratio is the average total assets, which represents the average amount of assets the company has used to generate its earnings over a given period.

Learning Objectives

Understand and correctly identify components and calculations involved in key financial ratios, including solvency, profitability, and liquidity ratios.

The denominator of the return on total assets ratio is the average total assets.

Definitions

Learning Objectives

Learning Objectives

Related questions