Explanation of Return on Total Assets:

Also called Return on Total Investment, or ROI, the Return on Total Assets measures the Net Earnings in relation to the Total Assets.  The Return on Total Assets identifies how well the investments of the company (the Total Assets) have generated earnings (Net Earnings) back to the company. 

Importance of Return on Total Assets:

Smart companies strictly control major purchases, attempting to limit those that will best bring a return in greater revenue to the company.  The Return on Total Assets is a useful way to measure how well the company is actually able to make intelligent choices on how to spend its money on new assets.

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