One important difference between return on assets (ROA)and return on common shareholder's equity (ROCE)is
A) ROA does not differentiate based on how a company finances its assets; ROCE does.
B) ROA does not distinguish between the different types of income items, such as income from continuing operations, discontinued operations, extraordinary items and changes in accounting principles; ROCE does.
C) ROCE does not distinguish between the different types of income items, such as income from continuing operations, discontinued operations, extraordinary items and changes in accounting principles; ROA does.
D) ROCE does not differentiate based on how a company finances its assets; ROA does.

Question

Quizplus · Accepted Answer

ROA does not differentiate based on how a company finances its assets, while ROCE does. ROCE takes into account the cost of debt and equity financing, while ROA does not.

One Important Difference Between Return on Assets (ROA)and Return on Common