Answered: which ratio is of greater interest to…

which ratio is of greater interest to the owner-manager, the rate of return on total assets or the rate of return on equity? Explain your answer.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 5Q

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Question

which ratio is of greater interest to the owner-manager, the rate of return on total assets or the rate of return on equity? Explain your answer.

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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