Which of the Following Statements Regarding the Return on Equity

question 93

Multiple Choice

Which of the following statements regarding the return on equity (ROE) measure is incorrect?

• A) ROE is used to measure the profitability of the firm in relation to the amount invested by stockholders.
• B) ROE equals net income divided by average total stockholders' equity.
• C) ROE is affected by a company's use of leverage.
• D) A company's ROE is lower than its return on investment because ROE does not consider that part of the business that is financed by debt.

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Definitions:

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A feeling of worry, nervousness, or unease about something with an uncertain outcome.

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A mental disorder characterized by persistent and intense feelings of sadness or despair and a lack of interest in activities, impacting daily functioning.

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Relating to or consisting of distinct or separate events or experiences, often in the context of memory.