The mere fact that a business is earning high rates of return on the business's asset indicates that:

Question

Quizplus · Accepted Answer

High rates of return on assets indicate that the business is generating profits and is worth more as a going concern than as a dead one. This suggests that it would be wise to continue to invest in the business and grow it further. Downsizing or limiting cash flows returned to investors would not be recommended in this case.

The Mere Fact That a Business Is Earning High Rates