Return on Equity (ROE)can Be Calculated By: Net Income

question 6

Multiple Choice

Return on equity (ROE) can be calculated by: Net Income / Average Shareholders' Equity.The reasoning for this method is:

• A)net income is earned over the year and shareholder's equity measures invested capital at the end of the year.Average shareholder's equity gives a measure of capital invested throughout the year.
• B)net income is measured at the end of the year and shareholder's equity is measured at the beginning of the year.Averaging the shareholder's equity will result in a better match between the timing of the net income measure and the measure of the invested capital (equity).
• C)to reduce the number of observations.
• D)to increase ROE as average shareholders' equity is usually lower than ending shareholders' equity.

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Definitions:

Wernicke's Aphasia

A neurological condition characterized by fluent but meaningless speech and difficulties in understanding spoken language, typically due to damage in the brain's temporal lobe.

Broca's Aphasia

A condition resulting from damage to a specific area of the frontal lobe of the brain, characterized by difficulty in producing speech.

Apraxia

A motor disorder caused by damage to the brain (in areas involved in planning the motor movements), resulting in difficulty with executing voluntary muscle movements, despite having the desire and the physical capability to perform the movements.

Parietal Lobe

A region of the cerebral cortex that plays a key role in processing sensory information from various parts of the body, spatial navigation, and the integration of sensory input with visual information.