Question

when comparing the rate of return on various assets, what is the most important consideration and why?

Answer 1

When comparing the rate of return on various assets , what are the important consideration and why

But before that let's discuss the topic rate of return on various assets it is also called ROA(Return on assets)

Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets or single asset. ROA gives a manager, investor, or analyst an idea as to how efficient a company's management is at using its assets to generate earning.

Now for comparing the rate of return on various assets, ROA can be measured which can be calculated by the formula :

ROA = Net Income / Total Assets

Now what are the considerations for comparing the rate of return on various assets

if we see the formula, if net income or total assets either increase or decrease can affect rate of return on assets, Likely, changes observed in ROA is a combination of several impacts — profits, asset productivity, working capital can also be consideration while comparing rate of return on various assets.