Which of the Following Statements Is True

question 9

Multiple Choice

Which of the following statements is true?

• A)Turnover is not related to ROA.
• B)Leverage affects EPS.
• C)ROA is a function of turnover and leverage.
• D)EPS is solely a function of ROE

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Definitions:

Common Shareholders' Equity

The amount of money that would be returned to common shareholders if all of the assets were liquidated and all of the company's debts were paid off.

Preferred Dividends

Dividends that are paid to preferred shareholders before any are paid to common shareholders, often at a fixed rate.

Payout Ratio

A financial metric that measures the proportion of earnings a company pays to its shareholders in the form of dividends, typically expressed as a percentage.

Retained Earnings

Retained earnings refer to the cumulative amount of net income a company retains, rather than distributing it to shareholders as dividends.