I hope you’ve had a great week.
Today, I would like to discuss return on assets. Effective companies utilize their assets wisely by ensuring for example that low margins are supported by an equally low asset density coupled with the ability to remove waste and inefficiencies from processes. Continuous investment in assets and continuous improvement of processes yields better operating asset efficiency and is good for shareholders as well. Asset depreciation with a stagnant revenue stream is not good for shareholders as the net-to-gross ratio tends to decline as assets age without the appropriate replacements or investments being made.
I hope you’ve enjoyed this E.O.W and as always, “Success is continuous improvement.”