Which one of the following statements does NOT describe a problem with using ROE as a performance measure?
A) ROE measures return on accounting book value,and this problem is not solved by using market value.
B) ROE is a forward-looking,one-period measure,while business decisions span the past and present.
C) ROE measures only return,while financial decisions involve balancing risk against return.
D) None of these describe problems with ROE.
E) All of these describe problems with ROE.

Question

Quizplus · Accepted Answer

Statements A, C, and D describe valid problems with using ROE as a performance measure. Statement B is not a problem with ROE, but rather a limitation of using any one-period measure to evaluate long-term business decisions.

Which One of the Following Statements Does NOT Describe a Problem