What Is the Purpose of Return on Assets as an Analytical

question 156

Essay

What is the purpose of return on assets as an analytical tool?

Estimate the probability of investment losses based on statistical measures.

Know how to compute geometric and arithmetic average returns.

Understand the concept of the real rate of return and its importance in financial analysis.

Be able to identify and calculate the risk premium on various investment types.

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Definitions:

Proceeds

The amount of money or assets received from a transaction, sale, or event.

Beneficiary

An individual or entity entitled to benefits or proceeds from an insurance policy, trust, will, or other contracts.

Donee Beneficiary

A third party who benefits from a contract made between two other parties, where the intent is to benefit the third party.

Gratuitous Assignment

A transfer of rights or property without consideration or payment from the recipient.