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What is the difference between return on assets and return on equity from the perspective of an investor?
Wiki User
∙ 11y ago
Well lets try to make this simple.
Lets say our widget company made a net profit of $100,000 for the year. lets look at how the same profit might be reported two different ways.
Return on assets, would be a calculation based on all assets. Lets say the buildings, machines, inventory, WIP, accounts receivable, cash on hand, leasehold improvements + all the things of value that the company owns title to are worth $1 million. Then it would be $100,000 return on $1million in assets or 10% ROA
Return on Equity: If your investors put up $200,000 equity to start the company and all the rest is cash flow & debt, borrowed money. Then it would be $100,000 return on $200,000 equity or 50% ROE
Now just for the record that is a gross oversimplification & some business professor or accountant is tearing his/her hair out, but in the simplest terms that is the concept answer. ROI & ROCE are similar concepts with subtle differences.
Wiki User
∙ 11y ago
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Difference between real assets and financial assets?
Real assets are physical assets such as plant, machinary, vehicles, stock/ inventory. Financial assets, are cash, bonds, shares etc., etc.
The difference between assets and liabilities is called?
Net Worth or Equity
Difference between bonds and debentures?
A debunture is an unsecured loan certificate issued by a company, backed by general credit rather than by specified assets. A bond is a debt investment in which an investor loans money to an entity that borrows the funds at a fixed interest rate.
What the difference between current assets vs total assets?
Current assets are assets include assets that will converted into cash or consumed in the current operating period while total assets include all assets regardless of when they will be converted to cash or consumed.
What is the difference between return on investment and return on assets?
They are one and the same and they are used interchangeably.
What is difference between a primary market and a secondary market?
a primary market is financial assets that can be redeemed only by the original investor; a secondary market's assets can be resold
What is the difference between a company's assets and its liabilities or its net assets is?
Equity
What is difference between personal assets and company assets?
Personal assets is assets that are owned by a person. Company assets are assets that are own by the company.
A collection of financial assets is known as an investor's?
Portofolio
The difference between assets and liabilities is?
assets are what the business owned and liabilities are what the business owe.
What is the difference between assets and fixed assets?
The differences between assets and fixed assets are; If you take an asset you will get your money back anytime but if you get a fixed assets the bank will keep your money untill the timeframe is over.
What is the difference between vouching and verification of assets and liabilities?
What_is_the_difference_between_vouching_and_verification_of_assets_and_liabilities
What is the difference between total current assets and total current liabilities is?
the difference between total current assets and total liability is the working capital. It goes with a formula 'current asset -current liability =working capital '
Is Net worth is the difference between your assets and your liabilities?
Yes - it's the sum of your assets minus the sum of your liabilities.
Difference between real assets and financial assets?
Real assets are physical assets such as plant, machinary, vehicles, stock/ inventory. Financial assets, are cash, bonds, shares etc., etc.
The difference between assets and liabilities is called?
Net Worth or Equity
Difference between bonds and debentures?
A debunture is an unsecured loan certificate issued by a company, backed by general credit rather than by specified assets. A bond is a debt investment in which an investor loans money to an entity that borrows the funds at a fixed interest rate.
