Rate of return on stock holders' equity and return on assets
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Why should a healthy company's rate of return on stock holders' equity exceed its rate of return on total assets?
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The solution discusses the concept of rate of return on stock holders' equity and rate of return on total assets.
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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 ...
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