A High Return on Equity Ratio Is Generally a Good

question 99

True/False

A high return on equity ratio is generally a good indication for a business; however, this ratio is highly affected by debt and may not be an accurate measurement of management effectiveness.

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Definitions:

Noncontrolling Interest

A stake in a corporation where the shareholder owns less than a majority of the company's shares, without significant control over its strategic decisions.

Equity Method

An accounting technique used by a company to record its investment in another company when it has significant influence but not full control.

Consolidated Financial Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as one single entity.