Question

To calculate return on assets (ROA), the numerator will include which of the following? a. net income plus tax expense b. net income plus interest expense c. net income minus preferred dividends d. net income

Answer 1

Answer:

d. net income

Explanation:

The formula to compute the return on assets is as follows

Return on assets = Net income ÷ Total assets

Or

Return on assets = Net income ÷ Average of total assets

As the case maybe

By dividing the net income from the total assets or average of total assets we can get the return on assets and the same is to be considered

hence, the correct option is d. net income