Which One of the Following Is NOT an Advantage of Using

question 108

Multiple Choice

Which one of the following is NOT an advantage of using return on equity (ROE) as a goal?

• A) ROE is highly correlated with shareholder wealth maximization.
• B) ROE and the DuPont analysis allow management to break down the performance and identify areas of strengths and weaknesses.
• C) ROE does not consider risk.
• D) All of the above are advantages of using ROE as a goal.

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Definitions:

Unit Basis

A measurement or pricing method that relies on a per unit calculation, often applied in contexts such as billing, production, or statistical analysis.

Procurement

The process of finding, agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process.

Ownership

The legal right or state of having control over property, a company, or an artifact.

Surplus

The amount by which production or supply exceeds demand or usage.