When will ROE equal ROC?
A) Whenever the firm has equal debt and equity financing
B) Whenever the firm has no debt
C) Whenever the value of the firm's assets exceeds the value of its equity
D) ROE will never equal ROC

Question

Quizplus · Accepted Answer

ROE (Return on Equity) equals ROC (Return on Capital) when the firm has no debt because both metrics will be calculated based solely on equity, making them equal.

When Will ROE Equal ROC