Question

The rate of return on total assets is calculated by first subtracting interest expense from net...

The rate of return on total assets is calculated by first subtracting interest expense from net income and then dividing the result by average total assets.

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Answer #1

True

Explanation

The rate of return on total assets is calculated by fist subtracting interest expense from net income and then dividing the result by average total assets.

Average total assets = opening assets+ closing assets/2

Return on assets explains the returns generated by the average invested assets. it explains the efficiency of the average invested assets by generating net income.higher return on assets is an indication of assets utilized efficiently.

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