A Clear Distinction Between Return on Assets and Return on Equity

question 76

Multiple Choice

A clear distinction between return on assets and return on equity is that return on assets:

• A) must always be a smaller percentage than is return on equity.
• B) is a measure of management's investment decisions that excludes any consideration of how the investments were financed.
• C) is of greater interest to investors than is return on equity.
• D) measures operating leverage while return on equity measures financial leverage.

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