The Author Presents the Return on Equity (ROE)as One of Our

question 44

Essay

The author presents the Return on Equity (ROE)as one of our most important benchmarks because it measures the return to the owners of the firm.because stockholders own the firm,maximizing their returns is considered an important goal.Use the DuPont method to de construct the ROE into three components and briefly discuss what information each provides to the total ROE value.

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Definitions:

Temporal Method

A method used in accounting to translate foreign currency transactions into the reporting currency of a business.

Current Exchange Rates

The present value of one currency in terms of another, used in converting from one currency to another.

Remeasured

Refers to the adjustment of the value of an asset or currency to reflect current market values or exchange rates.

Functional Currency

The currency of the primary economic environment in which an entity operates, usually determined by the currency in which it predominantly generates and expends cash.