COPY AND PASTE Question: Is ROA a better performance measurement than ROE? Discuss. Font Size = 11 - Arial , Spacing = 1.5YOUR ASSIGNMENT HERE

Return on Equity (ROE) and Return on Assets (ROA) are two of the most important measures of evaluating the performance of the company by measuring the performance of the management in terms of the capital in trusted to them by the shareholders of the company.
The Term Return on Equity (ROE) refers to the ratio to calculate the return earned by the company in terms of equity invested by the shareholders of the company. This ratio helps to understand whether the company is able to earn profits on the capital invested by the shareholders of the company. Most of the shareholders are interested in this ratio only before investing in the company because this ratio helps to understand whether the shareholders will be able to earn profits on the capital invested by them in the company. This ratio is always represented as a percentage.
The ratio used to measure the Return on Equity (ROE) is calculated as Net Profit divided by the Shareholders funds of the company. The formula used to evaluate the Return on Equity (ROE) ratio is as under:
Net Profit / Shareholders Funds
Shareholders funds is calculated by Total Assets – Liabilities.
Since the Shareholders have invested their savings in the company, they expect the company to earn enough profits for them so that the return earned by the company is more than the alternative investment options available to the shareholders of the company. Hence the higher...