Return on Equity Is Equal to

question 85

Multiple Choice

Return on equity is equal to

• A) net income divided by owners equity.
• B) owners equity divided by net income.
• C) total assets divided by owners equity.
• D) owners equity divided by total assets.

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Definitions:

Internal Rate of Return

A financial metric used to estimate the profitability of potential investments by calculating the rate of return at which the net present value of costs (cash outflows) equals the net present value of benefits (cash inflows).

Average Rate of Return

A financial ratio used to measure the profitability of an investment, calculated as the average annual profit divided by the initial investment cost.

Cash Payback Period

The time period required for the cash inflows from a capital investment project to cover the initial cash outlay.

Net Cash Inflow

The surplus of cash revenues over cash expenses in a given period, indicating the liquidity added to an entity.