Which financial ratio measures the rate of return on the book value of shareholders' total investment in the company?
A) return on investment
B) return on equity
C) gross profit margin
D) net profit margin
E) earnings per share

Question

Quizplus · Accepted Answer

Return on Equity (ROE) compares the net income of a company to the shareholders' equity, which is the book value of their total investment in the company. ROE measures how effectively the company is using its equity to generate profits.

Which Financial Ratio Measures the Rate of Return on the Book