Last Year's Return on Equity Was 30

question 100

Multiple Choice

Last year's return on equity was 30%.This year the ROE has decreased to 20%,while the same amount of earnings was generated this year.The firm has no preferred stock.What caused the decrease?

• A) Equity decreased by 10%.
• B) Equity decreased by 50%.
• C) Equity increased by 10%.
• D) Equity increased by 50%.

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Definitions:

Related Parties

Parties are considered related if one party has the ability to control or significantly influence the financial and operational decisions of another.

Non-executive Directors

Individuals who sit on a company's board but are not part of the day-to-day management, often providing independent oversight.

Related Party Transactions

Financial dealings between parties that have a relationship with the entity, which can include transactions with family members, key management personnel, or major shareholders.

Borrowed Money

Funds that are obtained through loans from banks, financial institutions, or other sources that must be repaid over time with interest.