What does Return on Assets (ROA) measure?

Return on Assets (ROA) specifically measures a company's ability to generate profit from its assets. The formula for ROA is Net Income divided by Total Assets. This ratio indicates how effectively a company is utilizing its assets to produce earnings. A higher ROA signifies a more efficient use of assets in generating profits, which is a crucial indicator for investors and analysts assessing the performance and operational efficiency of a company.

The other choices do not accurately reflect what ROA measures. While the second option describes the relationship between total assets and total equity, it relates to financial leverage rather than profitability. The third option presents a measure of return that does not directly connect to asset utilization, and the fourth option involves market value rather than total assets, which further strays from the intent of measuring asset efficiency. Thus, Option A is the precise measurement for ROA.