Question

51. If assets are unchanged and revenues go up, all else equal.
    1. ROA will not be affected
    2. ROA will go down
    3. ROA will go up
    4. We don’t have enough information to determine the outcome

48. If assets increase and costs increase (all else equal).

1. ROA will not be affected
2. ROA will go down
3. ROA will go up
4. We don’t have enough information to determine the outcome

51. If assets go down and revenues go up, all else equal.
    1. ROA will not be affected
    2. ROA will go down
    3. ROA will go up
    4. We don’t have enough information to determine the outcome

Answer 1

ROA = Net Income / Total Assets

Answer 1)

If assets are unchanged and revenues go up, all else equal. means the assets and net profit both are same. Therefore no effect on ROA.

Option a is corrected.

Answer 2)

If assets increase and costs increase (all else equal) . Assets increased and net profits remains same. This will decrease the ROA.

Correct option is c

Answer 3)

If assets go down and revenues go up, all else equal. This means the assets will decrease and net Income will remain same, Then the ROA will increase.

option c is correct.