Question

Which ratio tells us how profitable we were being in relation to our assets?

a) Return on Assets (ROA)
b) Current Ratio
c) Debt to Equity Ratio
d) Gross Profit Margin

Answer 1

The Return on Assets (ROA) ratio measures a company's profitability in relation to its assets.

Step-by-step explanation:

The ratio that tells us how profitable we were being in relation to our assets is the Return on Assets (ROA).

The Return on Assets (ROA) is a financial ratio that measures a company's profitability by comparing its net income to its total assets.

ROA = Net Income / Total Assets

For example, if a company has a net income of $100,000 and total assets of $1,000,000, the ROA would be 0.1 or 10%. This means that the company generates 10 cents of profit for every dollar of assets.