How Is the Return on Equity Ratio Calculated

question 180

Multiple Choice

How is the return on equity ratio calculated?

• A) Operation income divided by retained earnings
• B) Net income divided by retained earnings
• C) Net income divided by total owners' equity
• D) Operating income divided by total owners' equity
• E) Net income divided by common stock

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Definitions:

Salary Allowances

Additional benefits or compensations provided to employees on top of their regular salary, which may include housing, transport, or medical allowances.

Liquidation

The process of closing a business and distributing its assets to claimants, often done when a company is insolvent.

Going Out Of Business

The process of closing a company permanently, often involving selling off assets and paying off creditors.

Revaluation Of Land

The process of adjusting the book value of land to reflect its current market value, often leading to an increase in assets on the balance sheet.