The return on common shareholders' equity is affected by both the return on assets and debt to total assets ratios.

Question

Quizplus · Accepted Answer

The return on common shareholders' equity is influenced by the company's profitability (as measured by the return on assets) and its financial leverage (as indicated by the debt to total assets ratio). Higher profitability and efficient use of debt can increase the return to shareholders.

The Return on Common Shareholders' Equity Is Affected by Both