Which One of the Following Is NOT an Advantage of Using

question 46

Multiple Choice

Which one of the following is NOT an advantage of using 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:

Capital

Funds or financial assets leveraged by companies to fund their operations and grow their businesses.

Profit

The earnings obtained when the income generated from business operations is higher than the expenses, costs, and taxes required for these operations.

Output Market

Marketplaces where finished goods or services are sold to consumers, as opposed to input markets where raw materials are bought.

Consumers

Individuals or entities that purchase goods or services for personal use, not for manufacture or resale.