Answer
As we know the return on asset is computed as given below:
Net Income
Return on Assets ratio = -- --X 100
Average Total Assets
By introducing a new product line, there will be increase in net income, and the Total Assets will remain unchanged.
Work Step by Step
This will improve the Return on Asset ratio. However, if the company is required to increase the assets by putting additional production facilities (like machinery), the new ratio may improve or decrease the ratio, will depend on the Capital expenditure incurred and the net income generated
