Describe the Return on Assets Ratio and the DuPont Approach

question 74

Essay

Describe the return on assets ratio and the DuPont approach for calculating return on assets.

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Definitions:

Revenue and Cost

Refers to the total income generated from business activities before expenses are subtracted, and the expenses incurred in generating that revenue, respectively.

Short Run

In economics, a period in which at least one input is fixed, limiting the firm's ability to adjust to changes in the market.

Economic Profit

The balance remaining once total revenue is reduced by both obvious and hidden expenses.

Profit-maximizing Firm

A business whose goal is to produce a level of output at which profits are at their highest.