61.Return on assets is useful to decision makers for evaluating management, analyzing and forecasting profits, and in planning activities.
62.Arrow's net income of $117 million and average assets of $1,400 million results in a return on assets of 8.36%.
Return on Assets = Net Income/Average Assets
Return on Assets = $117 million/$1,400 million = 8.36%
63.Return on assets reflects a company's ability to generate profit through productive use of its assets.
64.Risk is the uncertainty about the return we will earn.
65.Generally the lower the risk, the higher the return that can be expected.
66.U.S. Government Treasury bonds provide low return and low risk to investors.
67.The four basic financial statements include the balance sheet, income statement, statement of retained earnings, and statement of cash flows.
68.An income statement reports on investing and financing activities.
69.A balance sheet covers activities over a period of time such as a month or year.
70.The income statement describes revenues earned and expenses incurred over a specified period of time due to earnings activities.