The Equity That a Homeowner Has in a House Is

question 158

True/False

The equity that a homeowner has in a house is the amount of money that could be made by selling the house and paying off the mortgage. This idea is similar to the idea of owners' equity in a business.

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Definitions:

ROCE

Return on Capital Employed (ROCE) is a financial ratio that measures a company's profitability in terms of the capital it uses.

ROE

Return on Equity; a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how much profit a company generates with the money shareholders have invested.

Debt

Debt represents money borrowed by one party from another, under the condition that it is to be paid back with interest, typically used for business operations or purchases.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume.