Operating Return on Assets (OROA)is Equal to Operating Profit Margin

question 20

True/False

Operating return on assets (OROA)is equal to operating profit margin times total asset turnover.

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Definitions:

Weighted Average

This is an average in which each quantity to be averaged is assigned a weight, reflecting its importance.

Variances

Statistical measures that represent the degree of spread or dispersion of a set of values around their mean, commonly used to quantify risk in finance.

Covariances

Indicators of how two or more variables are related and move together.

Capital Allocation Line

A graph line that shows the risk-return trade-off for efficient portfolios, indicating the rate of return for each unit of risk.