Which of the Following Could NOT Explain an Increase in the Return

question 24

Multiple Choice

Which of the following could NOT explain an increase in the return on equity ratio?

• A) Share buyback
• B) Declaring a final dividend
• C) Increase in gross profit
• D) Purchase of land on credit

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Definitions:

ROE

A financial ratio expressing the profitability of a firm in relation to stockholders' equity, used to assess how efficiently a company uses investments to generate profit.

Common Equity

The portion of a company's equity that is held by common shareholders, represented by common stock.

Net Income

The profit a company generates after all expenses, taxes, and costs have been subtracted from total revenue.

Taxes

Compulsory financial charges imposed by a government on individuals, entities, or transactions to fund public expenditures.