ZeroFued's Net Income for the Year Was $300,000

question 14

Multiple Choice

ZeroFued's net income for the year was $300,000.Average assets totaled $2 million, and average liabilities totaled $500,000.Return on equity (ROE) was:

• A)12%
• B)15%
• C)20%
• D)60%

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Definitions:

Income Statement

A financial document that shows a company's revenue, expenses, and profits over a specific period, providing insight into its operational efficiency.

Financial Metrics

Quantitative measures used to assess the financial health, performance, and condition of a business, aiding in decision-making and strategy formulation.

Profit-Leverage Effect

A financial principle indicating that a decrease in operating costs can have a more significant impact on profits than an equivalent increase in sales revenue.

Purchase Spend

Purchase spend refers to the total amount of money a company expends on acquiring goods and services necessary for its operations.