Which Ratio Is of Greater Interest to the Owner-Manager, the Rate

question 7

Essay

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

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Definitions:

Duty of Cooperation

An obligation that requires the parties in a contract to act in good faith and assist each other in fulfilling the contract terms.

Principal's Duty

The obligations and responsibilities a principal owes to an agent in an agency relationship, including compensation, reimbursement, and indemnification for acts performed within the scope of the agency.

Agent Performance

The assessment of an agent's actions in fulfilling their duties on behalf of a client or principal.

Implied Right

A right that is not explicitly stated but is considered to exist due to its necessity or because it is not forbidden.