Which of the following is NOT considered an asset management ratio?

• A. Total Asset Turnover Ratio
• B. Inventory Turnover Ratio
• C. Receivables Turnover Ratio
• D. Return on Assets (ROA)

Answer: (D)

Verified step by step guidance

1. Step 1: Begin by understanding the concept of asset management ratios. These ratios measure how efficiently a company uses its assets to generate revenue or manage operations. Common examples include Total Asset Turnover Ratio, Inventory Turnover Ratio, and Receivables Turnover Ratio.
2. Step 2: Review the definition of Return on Assets (ROA). ROA is a profitability ratio that measures how effectively a company generates profit from its assets. It is calculated as Net Income divided by Total Assets, and its focus is on profitability rather than asset management efficiency.
3. Step 3: Compare the listed ratios to determine which one does not fit the category of asset management ratios. Asset management ratios focus on operational efficiency, while ROA focuses on profitability.
4. Step 4: Identify that Total Asset Turnover Ratio, Inventory Turnover Ratio, and Receivables Turnover Ratio are all asset management ratios because they measure how well assets are utilized in operations.
5. Step 5: Conclude that Return on Assets (ROA) is NOT an asset management ratio because it is a profitability ratio, not a measure of operational efficiency.