Which of the Following Statements Regarding the Return on Equity

question 43

Multiple Choice

Which of the following statements regarding the return on equity (ROE) measure is not true?

• A)ROE is used to measure the profitability of the firm in relation to the amount invested by stockholders.
• B)ROE equals net income divided by average total stockholders' equity.
• C)ROE is affected by a company's use of leverage.
• D)A company's ROE is lower than its return on investment because ROE does not consider that part of the business that is financed by debt.

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