Return on Equity Is a Ratio That

question 123

Multiple Choice

Return on equity is a ratio that:

• A) is calculated by dividing profit plus preferred dividends by average common shareholders' equity.
• B) cannot be calculated if the company has preferred shares in addition to common shares.
• C) shows the relationship between net earnings and retained earnings.
• D) shows the relationship between net earnings and average shareholders' equity.

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Definitions:

Insufficient Financing

A situation where the available financial resources are not adequate to support the current operations or growth plans of a business.

Maintaining Operations

The ongoing activities required to keep a system, process, or piece of equipment running effectively.

Access to Customers

The ability of a business to reach and interact with its target audience, essential for marketing, sales, and customer service.

Succession Problem

A challenge faced by organizations when planning for the replacement of key leadership positions.