Final answer:
The ratios that measure a firm's efficiency in managing assets and shareholder returns are Return on Investment (ROI) and Return on Equity (ROE), which show profitability relative to total investment and shareholder equity respectively.
Step-by-step explanation:
The ratios that measure the overall efficiency of a firm in managing its investment in assets and in generating a return to shareholders are Return on Investment (ROI) and Return on Equity (ROE). These financial metrics provide valuable insights into how well a company is utilizing its assets to produce profits and how effectively it is generating earnings relative to the shareholders' equity. ROI is calculated by dividing the net profit by the total investment, providing a measure of the profitability relative to the costs of the investment. On the other hand, ROE assesses a company's profitability by revealing how much profit a company generates with the money shareholders have invested by dividing the net income by the shareholder's equity.
Other ratios like gross profit margin and net profit margin do indicate how much profit a firm is making relative to its revenues, but they do not directly measure asset management efficiency or the return provided to shareholders. Similarly, total asset turnover provides insight into how efficiently a firm uses its assets to generate revenue, and operating profit margin indicates the efficiency in managing operational costs relative to revenue.