Asked by Rebika Basnet on May 14, 2024
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Describe the return on assets ratio and the DuPont approach for calculating return on assets.
Return on Assets Ratio
A measure of how effectively a company uses its assets to generate profit, calculated as net income divided by total assets.
DuPont Approach
A method of performance measurement that breaks down return on equity (ROE) into three components: operating efficiency, asset use efficiency, and financial leverage, to help analyze a company's financial condition.
- Acquire proficiency in calculating and elucidating the return on assets (ROA) metric.
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Learning Objectives
- Acquire proficiency in calculating and elucidating the return on assets (ROA) metric.
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