Final answer:
The statement is false because ROA measures profitability relative to total assets, and more assets do not automatically lead to a higher ROA. ROA is calculated by dividing net income by total assets, and a company's asset efficiency in generating profit is what determines the ROA. The correct option is B.
Step-by-step explanation:
The statement "If everything else is equal, a company that has more assets will have a higher return on assets (ROA)." is False. The Return on Assets (ROA) is a financial ratio that indicates how profitable a company is relative to its total assets.
ROA is calculated by dividing the company's net income by its total assets.
Therefore, merely having more assets does not guarantee a higher ROA; it depends on the efficiency with which a company uses its assets to generate profit.
A company with a higher amount of assets but lower profits might have a lower ROA than a company with fewer assets but higher profits.
To understand this concept better, consider two companies: Company A with assets worth $1,000,000 and a net income of $100,000 would have an ROA of 10%.
Company B with assets worth $2,000,000 and a net income of $180,000 would have an ROA of 9%. Even though Company B has more assets, it has a lower ROA. The correct option is B.