Which financial ratio would be used to evaluate how effectively a company turns its total assets into net income?

The financial ratio that evaluates how effectively a company turns its total assets into net income is the return on assets (ROA). This ratio is calculated by dividing the net income by the total assets, and it reflects the efficiency of a company's use of its assets to generate profit. A higher ROA indicates that a company is more effective in converting its investments in assets into earnings, which is a key indicator of overall financial performance.

This measure is particularly useful for comparing companies within the same industry, as it allows analysts and stakeholders to assess how well companies utilize their resources to generate income relative to their total asset base. Understanding ROA can help investors and management make informed decisions regarding asset management and investment strategies.