The ________ measures a company's success in using its equity to earn income for the stakeholders who are financing the business.

Question

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The return on equity (ROE) is the measure of a company's success in using its equity to earn income. It calculates the net income a company has earned divided by its total shareholder equity. This ratio shows how much profit a company generates for each dollar invested by its shareholders. Options A, C, and D are all important financial ratios, but they do not specifically measure a company's success in using its equity to earn income.

The ________ Measures a Company's Success in Using Its Equity