If a Firm Has No Debt, Then ROA Is ____

question 32

Multiple Choice

If a firm has no debt, then ROA is ____ ROE.

• A) less than
• B) equal to
• C) greater than
• D) not comparable to

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Definitions:

Retained Earnings Account

An equity account on the balance sheet that represents the accumulated net income of a company that has not been distributed to shareholders as dividends.

Net Income

The amount of profit remaining after all expenses, taxes, and costs have been subtracted from total revenue.

Dividends Declared

Profit distributed to shareholders that the company's board of directors has committed to pay out.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities; often referred to as stockholders' equity or owners' equity.