Which of the Following Shows the Relationship Between Net Income

question 66

Multiple Choice

Which of the following shows the relationship between net income and average common shareholders' equity?

• A) current ratio
• B) acid-test ratio
• C) return on equity
• D) return on assets

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Definitions:

Total Assets

The sum of all monetary values of everything a company owns, including cash, investments, property, and other resources, reflected on its balance sheet.

Reserve Requirements

The fraction of deposits that banks are required by law to keep on hand or with the central bank as a safeguard against bank runs.

Money Multiplier

A factor that quantifies the amount of money that banks generate with each unit of reserves.

Reserve Ratio

The fraction of deposits that banks are required to keep on hand as reserves, aimed at ensuring liquidity and controlling the money supply.