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What Is a More Meaningful Measure of Profitability for a fiRm

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Essay

What is a more meaningful measure of profitability for a firm, return on assets or return on equity?
Why?


Definitions:

Objective Reality

The state or quality of being true and existent outside of personal perceptions, interpretations, feelings, or biases.

Positivism

A philosophical approach that asserts that knowledge should be derived from empirical and observable evidence.

Theoretical Approach

A systematic way of thinking about and analyzing a phenomenon, guided by a set of concepts and propositions.

Urban-Rural Differences

The varying characteristics, lifestyles, and social and economic conditions that distinguish urban areas from rural areas.

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