Chapter 1, Problem 1.6.1MBA

To determine

Return on Assets:

It is a profitability ratio that is used to measure the net profits generated by total assets throughout the period. In simple words, it indicates the efficiency of a company in dealing its assets to earn net income. It is calculated by using following formula:

  $\text{Return on Assets (ROA) = }\frac{\text{Net Income}}{\text{Average Total assets}}\times 100$

This ratio is used in comparing a company with its competitor in the industry since it shows the ability of any business to generate profits from its assets which helps investors in recognizing good stock opportunities.

The ranking of company A, company B and company C in terms of return on assets without computing the same for each company.