Return on Equity Is Calculated As

question 48

Multiple Choice

Return on equity is calculated as:

• A)Net income divided by average stockholders' equity.
• B)Net income divided by ending stockholders' equity.
• C)Net income divided by average market value of equity.

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Definitions:

Operating Activities

Business activities directly related to the production and delivery of goods and services, which are reflected in a company's cash flow.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for non-cash transactions, changes in working capital, and items of income or expense to determine net cash provided by operating activities.

Fixed Assets

Long-term tangible assets used in the operation of a business that are not expected to be converted into cash in the coming year.

Statement of Cash Flows

A financial document that shows how changes in balance sheet accounts and income affect cash and cash equivalents.