Return On Assets
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The Importance of Investing Activities


          Investing activities are central to business decisions. Decisions about the amount and types of assets employed by a company are critical to its success and affect most other decisions. Financing activities are necessary to provide money for the acquisition of assets and other resources. The more a company invests, the greater its demand for capital. Operating activities also result from investing activities. Resources are used to produce, sell and distribute goods and services to customers. The ability of a company to manufacture and sell products depends on the resources in which it has invested. Thus, investment decisions, to a large extent, determine the operating and financing activities of a company. Success depends on how well managers are able to make investment decisions.

          Accounting information is useful for understanding and evaluating investment decisions. There are two key measurements used to evaluate investment decisions: Return on Assets(ROA) and Return on Equity(ROE). However, our group has decided to focus only on ROA since it is more commonly used than ROE.




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