Return on Equity….
A) Measures the return on the common stockholder's investment in the assets of the firm.
B) Measures the overall return on the firm's assets, including financial leverage and taxes.
C) Measures the operating return on the firm's assets regardless of financial leverage and taxes.
D) Is the percent of sales left after all operating expenses are deducted.

Question

Quizplus · Accepted Answer

Return on Equity (ROE) specifically measures the return (profit) generated on the common stockholder's equity investment in the firm, indicating how effectively the company uses the money invested by its equity shareholders.