The relation between a company's return on common equity (ROCE) and return on net operating assets (RNOA) reveals information about the company's success with financial leverage.

Question

Quizplus · Accepted Answer

ROCE measures the return earned on the capital invested by shareholders, while RNOA measures the return earned on the company's operating assets. By comparing the two, we can understand how effectively the company is using financial leverage to generate returns.

The Relation Between a Company's Return on Common Equity (ROCE)