Assets

Assets refer to financial value of a possession. Possessions in business can be physical in nature such as a vehicle or in the form of paper such as cash or contractual rights. Assets are generally reported in the upper half of a balance sheet.

Return on Assets

Return on Assets

One of the performance ratios used in business identifies the overall ability of management to efficiently utilize resources to generate a profit.   Corporate resources include human knowledge/skills and the balance sheet assets of the business.   The labor component is unquantifiable in terms of dollars, but assets with a dollar value associated with them are reflected on the balance sheet.   The return on assets measures management’s ability to earn a profit  on these balance sheet assets.

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