Explore BrainMass

Explore BrainMass

    Rate of return on stock holders' equity and return on assets

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Why should a healthy company's rate of return on stock holders' equity exceed its rate of return on total assets?

    © BrainMass Inc. brainmass.com June 3, 2020, 6:39 pm ad1c9bdddf
    https://brainmass.com/business/modified-internal-rate-of-return/rate-return-stock-holders-equity-return-assets-69484

    Solution Preview

    Return on stockholder's equity= Net Income/ Stockholders' equity and
    Return on total assets= Net Income/ Total assets

    The return on equity should be more than total assets because it indicates that the company is efficient. Of all the fundamental criteria that long-term investors consider, one ...

    Solution Summary

    The solution discusses the concept of rate of return on stock holders' equity and rate of return on total assets.

    $2.19

    ADVERTISEMENT