Company A has a total asset turnover of 2. Company B has a total asset turnover...
Company A has a total asset turnover of 2. Company B has a total asset turnover of 1.5. Which company will have the better return on assets?
Select one:
a. Company A, because the turnover is higher.
b. Cannot be determined from the information given.
c. Company B because the turnover is higher.
d. Neither company; an asset turnover less than 3 produces an ROA of zero.
Homework Answers
Answer
--Correct Answer = Option 'B' Return on Assets 'cannot be determined from the information given'.
--This is because information given is of total asset turnover
which is '=Sales / Total asset'.
--return on Assets = Net Income / Total Assets.
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