Asked by Michelle Mazur on Jun 19, 2024
Verified
The return on assets ratio is influenced significantly by a company's relative debt and equity financing of its assets.
Return On Assets Ratio
A financial metric used to evaluate a company's efficiency in generating profits from its assets, calculated by dividing net income by total assets.
Debt And Equity Financing
Ways in which a company raises funds through borrowing (debt) or selling ownership shares (equity).
- Discern the major financial ratios utilized to gauge liquidity, profitability, and leverage.
- Identify variations in concepts pertaining to alterations in ratios attributable to distinct financial activities or scenarios.
Verified Answer
EF
Emily FisherJun 22, 2024
Final Answer :
False
Explanation :
The return on assets (ROA) ratio measures a company's net income relative to its total assets, focusing on the efficiency with which a company uses its assets to generate profit, rather than how those assets are financed.
Learning Objectives
- Discern the major financial ratios utilized to gauge liquidity, profitability, and leverage.
- Identify variations in concepts pertaining to alterations in ratios attributable to distinct financial activities or scenarios.
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