Select the Incorrect Statement Regarding the Return on Equity (ROE)

question 49

Multiple Choice

Select the incorrect statement regarding the return on equity (ROE) measure.

• 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:

Retaliates

To respond to an action or injury with a similar or corresponding action, often in the context of revenge or defense.

Employment Equity

Policies and practices aimed at achieving equality in the workplace so that no individual or group is discriminated against in employment opportunities, compensation, or promotion.

Protected Groups

Designates categories of individuals legally protected from discrimination and harassment in the workplace, such as based on race, gender, religion, or disability.

Reasonable Accommodation

Voluntary adjustments to work or workplace that allow employees with special needs to perform their job effectively.